Lazard Ltd Reports Full-year and Fourth-quarter 2021 Results

Record annual and quarterly operating revenue, operating income and net income, as adjusted

Record annual and quarterly Financial Advisory operating revenue, reflecting strong broad-based activity across the business

Record annual and quarterly Asset Management operating revenue and year-end assets under management

Lazard Ltd (NYSE: LAZ) today reported record annual operating revenue¹ of $3,139 million for the year ended December 31, 2021. Net income, as adjusted², was a record $576 million, or $5.04 per share (diluted) for the year. On a U.S. GAAP basis, net income for the year was $528 million, or $4.63 per share (diluted).

For the fourth quarter of 2021, net income, as adjusted, was $217 million, or $1.92 per share (diluted), a quarterly record. On a U.S. GAAP basis, net income for the fourth quarter was $210 million, or $1.86 per share (diluted).

“Our results underscore the strong performance by both our businesses across our global franchise,” said Kenneth M. Jacobs, Chairman and Chief Executive Officer of Lazard. “With unprecedented advisory activity and a robust level of assets under management, we continue to invest for growth and long-term shareholder value.”

Note: Endnotes are on page 6 of this release. A reconciliation to U.S. GAAP is on page 14-15.

OPERATING REVENUE

Operating revenue¹ was a record $3,139 million for 2021, 24% higher than 2020. Fourth-quarter 2021 operating revenue was a record $968 million, 14% higher than the fourth quarter of 2020.

Financial Advisory

Our Financial Advisory results include M&A Advisory, Capital Advisory, Capital Raising, Restructuring, Shareholder Advisory, Sovereign Advisory, and other strategic advisory work for clients.

For the full year of 2021, Financial Advisory operating revenue was a record $1,778 million, 27% higher than 2020.

For the fourth quarter of 2021, Financial Advisory operating revenue was a quarterly record $608 million, 20% higher than the fourth quarter of 2020.

During and since the fourth quarter of 2021, Lazard has been engaged in significant and complex M&A transactions and other advisory assignments globally, including the following (clients are in italics): The Special Committee of the Board of VMware in Dell’s $52.5 billion spin-off of its 81% equity stake in the company and VMware’s payment of a special cash dividend; Clayton, Dubilier & Rice fund on the sale of its stake in Belron, valuing Belron at €21.0 billion; Air Products & Chemicals’ $12.0 billion joint venture in Jazan, Saudi Arabia; The Special Committee of the Board of Athene in Athene’s $11 billion merger with Apollo; Terminix on its acquisition by Rentokil Initial plc, for an enterprise value of $7.5 billion; 3G Capital on its acquisition of a controlling interest in Hunter Douglas, valuing the company at $7.1 billion; Altice’s $6.3 billion sale of its French towers joint venture with KKR to Cellnex; Affiliate of Lone Star Funds on its €5.2 billion sale of MBCC Group to Sika; SNCF’s €3.2 billion sale of Ermewa to a consortium made of CDPQ and DWS; Blackstone Infrastructure Partners’ approximately $3.0 billion investment in Invenergy Renewables Holdings; Allstate’s $2.8 billion sale of Allstate Life Insurance to Blackstone; Charterhouse Capital Partners in Mirion Technologies’ combination with GS Acquisition Holdings Corp II, valuing Mirion at $2.6 billion; Saint-Gobain’s $2.3 billion acquisition of GCP Applied Technologies; Mubadala Capital’s $1.7 billion acquisition of the RLAM refinery from Petrobras; Vitrolife's €1.25 billion acquisition of Igenomix; Obagi’s $1.2 billion announced combination with Waldencast and Milk Makeup; IBM on the separation of its Managed Infrastructure Services unit; and APEX Clean Energy on the sale of a majority stake in the company to funds managed by Ares Management.

Lazard has one of the world’s preeminent restructuring practices, with a long track record of successfully advising businesses and governments. During and since the fourth quarter of 2021, we have been engaged in a broad range of highly visible and complex restructuring and debt advisory assignments for debtors or creditors, including roles involving: Alto Maipo S.P.A.; Andrade Gutierrez; Assured Guaranty in connection with Puerto Rico’s restructuring; Basic Energy Services; Brazos Electric Power Cooperative; Corp Grupo Banking S.A.; Grupo GICSA; Intelsat S.A.; NMC Health; Nordic Aviation Capital; Seadrill Limited; and Stoneway Capital.

Our Capital and Shareholder Advisory practices remain active globally, advising on a broad range of public and private assignments. Our Sovereign Advisory practice continues to be active advising governments, sovereign and sub-sovereign entities across developed and emerging markets.

For a list of Lazard’s publicly announced Financial Advisory transactions, please visit our website at www.lazard.com/businesses/transactions.

Asset Management

In the text portion of this press release, we present our Asset Management results as 1) Management fees and other revenue, and 2) Incentive fees.

For the full year of 2021, Asset Management operating revenue was a record $1,329 million, 20% higher than 2020. For the fourth quarter of 2021, Asset Management operating revenue was a record $347 million, 3% higher than the fourth quarter of 2020.

Management fees and other revenue was $1,208 million for full-year 2021, 15% higher than 2020. For the fourth quarter of 2021, management fees and other revenue was $301 million, 6% higher than the fourth quarter of 2020, and 1% lower than the third quarter of 2021.

Average assets under management (AUM) for full-year 2021 was a record $272 billion, 21% higher than 2020. Average AUM for the fourth quarter of 2021 was $274 billion, 11% higher than the fourth quarter of 2020, and 2% lower than the third quarter of 2021.

AUM as of December 31, 2021 was a year-end record $274 billion, up 6% from December 31, 2020, and approximately even with September 30, 2021. The sequential change from September 30, 2021 was driven by market appreciation of $9.9 billion, partially offset by foreign exchange depreciation of $2.0 billion and net outflows of $6.7 billion.

For the full year of 2021, incentive fees were a record $120 million, compared to $58 million for 2020. For the fourth quarter of 2021, incentive fees were $46 million, compared to $52 million for the fourth quarter of 2020.

OPERATING EXPENSES

Compensation and Benefits

In managing compensation and benefits expense, we focus on annual awarded compensation (cash compensation and benefits plus deferred incentive compensation with respect to the applicable year, net of estimated future forfeitures and excluding charges). We believe annual awarded compensation reflects the actual annual compensation cost more accurately than the GAAP measure of compensation cost, which includes applicable-year cash compensation and the amortization of deferred incentive compensation principally attributable to previous years’ deferred compensation. We believe that by managing our business using awarded compensation with a consistent deferral policy, we can better manage our compensation costs, increase our flexibility in the future and build shareholder value over time.

Adjusted compensation and benefits expense¹ for 2021 was $1,836 million, 22% higher than 2020. The corresponding adjusted compensation ratio¹ was 58.5% for 2021, compared to 59.5% for 2020.

Awarded compensation expense¹ for 2021 was $1,846 million, 22% higher than 2020. The corresponding awarded compensation ratio¹ was 58.8% for 2021, compared to 59.8% for 2020.

We take a disciplined approach to compensation, and our goal is to maintain a compensation-to-operating revenue ratio over the cycle in the mid- to high-50s percentage range on both an awarded and adjusted basis, with consistent deferral policies.

Non-Compensation Expense

Adjusted non-compensation expense¹ for 2021 was $472 million, 9% higher than 2020. The ratio of non-compensation expense to operating revenue¹ was 15.0% for 2021, compared to 17.1% for 2020.

Adjusted non-compensation expense¹ for the fourth quarter of 2021 was $134 million, 15% higher than the fourth quarter of 2020. The ratio of non-compensation expense to operating revenue¹ was 13.8% for the fourth quarter of 2021, compared to 13.7% for the fourth quarter of 2020.

Our goal remains to achieve an adjusted non-compensation expense-to-operating revenue ratio over the cycle of 16% to 20%.

TAXES

The provision for taxes, on an adjusted basis¹, was $181 million for full-year 2021 and $54 million for the fourth quarter of 2021. The effective tax rate on the same basis was 23.9% for full-year 2021, compared to 20.2% for full-year 2020.

CAPITAL MANAGEMENT AND BALANCE SHEET

Our primary capital management goals include managing debt and returning capital to shareholders through dividends and share repurchases.

In 2021, Lazard returned $670 million to shareholders, which included: $196 million in dividends; $406 million in share repurchases of our Class A common stock; and $68 million in satisfaction of employee tax obligations in lieu of share issuances upon vesting of equity grants.

During 2021, we repurchased 9.1 million shares of our Class A common stock at an average price of $44.51 per share. On February 2, 2022, our Board of Directors authorized additional share repurchases of up to $300 million, which expires as of December 31, 2024, bringing our total outstanding share repurchase authorization to $431 million.

On February 2, 2022, Lazard declared a quarterly dividend of $0.47 per share on its outstanding common stock. The dividend is payable on February 25, 2022, to stockholders of record on February 14, 2022.

As of December 31, 2021, our cash and cash equivalents were $1,465 million, and stockholders’ equity related to Lazard’s interests was $975 million.

***

CONFERENCE CALL

Lazard will host a conference call at 8:00 a.m. EST on February 3, 2022, to discuss the company’s financial results for the full year and fourth quarter of 2021. The conference call can be accessed via a live audio webcast available through Lazard’s Investor Relations website at www.lazard.com, or by dialing 1 (800) 289-0720 (U.S. and Canada) or +1 (323) 701-0160 (outside of the U.S. and Canada), 15 minutes prior to the start of the call.

A replay of the conference call will be available by 10:00 a.m. EST on February 3, 2022, via the Lazard Investor Relations website, or by dialing 1 (888) 203-1112 (U.S. and Canada) or +1 (719) 457-0820 (outside of the U.S. and Canada). The replay access code is 8108108.

ABOUT LAZARD

Lazard, one of the world's preeminent financial advisory and asset management firms, operates from more than 41 cities and 26 countries in North America, Europe, Asia, Australia, Central and South America. With origins dating to 1848, the firm provides advice on mergers and acquisitions, strategic matters, restructuring and capital structure, capital raising and corporate finance, as well as asset management services to corporations, partnerships, institutions, governments and individuals. For more information on Lazard, please visit www.lazard.com. Follow Lazard at @Lazard.

Cautionary Note Regarding Forward-Looking Statements:

This press release contains forward-looking statements. In some cases, you can identify these statements by forward-looking words such as “may”, “might”, “will”, “should”, “could”, “would”, “expect”, “plan”, “anticipate”, “believe”, “estimate”, “predict”, “potential”, “target,” “goal”, or “continue”, and the negative of these terms and other comparable terminology. These forward-looking statements, which are subject to known and unknown risks, uncertainties and assumptions about us, may include projections of our future financial performance based on our growth strategies, business plans and initiatives and anticipated trends in our business. These statements are only predictions based on our current expectations and projections about future events. There are important factors that could cause our actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by these forward-looking statements.

These factors include, but are not limited to, those discussed in our Annual Report on Form 10-K under Item 1A “Risk Factors,” and also discussed from time to time in our reports on Forms 10-Q and 8-K, including the following:

• A decline in general economic conditions or the global or regional financial markets;
• A decline in our revenues, for example due to a decline in overall mergers and acquisitions (M&A) activity, our share of the M&A market or our assets under management (AUM);
• Losses caused by financial or other problems experienced by third parties;
• Losses due to unidentified or unanticipated risks;
• A lack of liquidity, i.e., ready access to funds, for use in our businesses; and
• Competitive pressure on our businesses and on our ability to retain and attract employees at current compensation levels.

Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance or achievements. Neither we nor any other person assumes responsibility for the accuracy or completeness of any of these forward-looking statements. You should not rely upon forward-looking statements as predictions of future events. We are under no duty to update any of these forward-looking statements after the date of this release to conform our prior statements to actual results or revised expectations and we do not intend to do so.

Lazard Ltd is committed to providing timely and accurate information to the investing public, consistent with our legal and regulatory obligations. To that end, Lazard and its operating companies use their websites, Lazard’s Twitter account (twitter.com/Lazard) and other social media sites to convey information about their businesses, including the anticipated release of quarterly financial results, quarterly financial, statistical and business-related information, and the posting of updates of assets under management in various mutual funds, hedge funds and other investment products managed by Lazard Asset Management LLC and Lazard Frères Gestion SAS. Investors can link to Lazard and its operating company websites through www.lazard.com.

ENDNOTES

¹ A non-U.S. GAAP measure. See attached financial schedules and related notes for a detailed explanation of adjustments to corresponding U.S. GAAP results. We believe that presenting our results on an adjusted basis, in addition to U.S. GAAP results, is the most meaningful and useful way to compare our operating results across periods.

² Fourth-quarter and full-year 2021 adjusted results exclude losses of $23.6 million (full-year) associated with restructuring and closing of certain offices, pre-tax charges of $1.0 million and $4.6 million, respectively, relating to office space reorganization, and $0.1 million and $16.5 million, respectively, relating to expenses associated with restructuring and closing of certain offices and $2.2 million in the fourth quarter and full year relating to our Tax Receivable Agreement obligation. On a U.S. GAAP basis, these resulted in a net charge of $6.8 million, or $0.06 (diluted) per share, for the fourth quarter, and a net charge of $47.6 million, or $0.42 (diluted) per share, for the full year of 2021.

LAZ-EPE

This presentation includes non-U.S. GAAP ("non-GAAP") measures. Our non-GAAP measures are not meant to be considered in isolation or as a substitute for the corresponding U.S. GAAP measures, and should be read only in conjunction with our consolidated financial statements prepared in accordance with U.S. GAAP. For a detailed explanation of the adjustments made to the corresponding U.S. GAAP measures, see Reconciliation of U.S. GAAP to Selected Summary Financial Information and Notes to Financial Schedules.

This presentation includes non-GAAP measures. Our non-GAAP measures are not meant to be considered in isolation or as a substitute for the corresponding U.S. GAAP measures, and should be read only in conjunction with our consolidated financial statements prepared in accordance with U.S. GAAP. For a detailed explanation of the adjustments made to the corresponding U.S. GAAP measures, see Reconciliation of U.S. GAAP to Selected Summary Financial Information and Notes to Financial Schedules.

This presentation includes non-GAAP measures. Our non-GAAP measures are not meant to be considered in isolation or as a substitute for the corresponding U.S. GAAP measures, and should be read only in conjunction with our consolidated financial statements prepared in accordance with U.S. GAAP. For a detailed explanation of the adjustments made to the corresponding U.S. GAAP measures, see Reconciliation of U.S. GAAP to Selected Summary Financial Information and Notes to Financial Schedules.

Note: Average AUM generally represents the average of the monthly ending AUM balances for the period.

This presentation includes non-GAAP measures. Our non-GAAP measures are not meant to be considered in isolation or as a substitute for the corresponding U.S. GAAP measures, and should be read only in conjunction with our consolidated financial statements prepared in accordance with U.S. GAAP. For a detailed explanation of the adjustments made to the corresponding U.S. GAAP measures, see Notes to Financial Schedules.

See Notes to Financial Schedules