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Lazard Ltd LAZ reported first-quarter 2022 record adjusted earnings of $1.05 per share, which beat the Zacks Consensus Estimate of 87 cents. The reported figure also reflects 21% year-over-year growth.
Higher revenues and growth in average assets under management (“AUM”) favored the company. Most likely due to this, shares of the company were up 1.97% following the earnings release. However, operating expenses witnessed a rise.
Adjusted net income in the reported quarter was $115 million, up 13% year over year. On a GAAP basis, Lazard’s net income came in at $114 million or $1.05 per share, up from $87 million or $0.75 per share recorded in the prior-year quarter.
Revenues & Expenses Rise
In the first quarter, adjusted operating revenues totaled a record $698.6 million, up 14% year over year. This upside resulted from an increase in financial advisory revenues. The reported figure also outpaced the Zacks Consensus Estimate of $669.1 million.
Operating expenses were $535.3 million in the quarter, up 2% year over year. Higher compensation and benefits, as well as non-compensation expenses, resulted in this rise.
Adjusted compensation and benefits expenses rose 14.3% on a year-over-year basis to $409 million. Adjusted non-compensation expenses for the quarter were $117 million, up 14% year over year.
The ratio of adjusted compensation expenses to operating revenues was 58.5%, down from the year-earlier quarter’s 59.5%. The ratio of non-compensation expenses to operating revenues was 16.8%, up from the year-ago quarter’s 15.8%.
Financial Advisory: The segment’s adjusted operating revenues were $388.1 million, up 22% from the year-earlier quarter.
Asset Management: The segment’s adjusted operating revenues were $311.8 million, down 5% from the prior-year quarter.
Corporate: The segment generated $1.3 million negative adjusted operating revenues against $2.6 million operating revenues in the prior-year quarter.
Total AUM Declines on Net Outflows
As of Mar 31, 2022, total AUM was recorded at $252.7 billion, down 5% from the prior-year quarter. The quarter witnessed a market and foreign-exchange depreciation of $14.5 billion and net outflows of $6.5 billion.
Average AUM came in at $256.4 billion, up 2% year over year.
Balance Sheet Position Weak
Lazard’s cash and cash equivalents totaled $878 million as of Mar 31, 2022, compared with $1.5 billion as of Dec 31, 2021. The company’s stockholders’ equity was $969.6 million compared with $1.08 billion as of Dec 31, 2021.
Steady Capital-Deployment Activity
In the first quarter of 2022, Lazard repurchased $176 million worth of shares and paid $47 million in dividends. As of Mar 31, 2022, its remaining share repurchase authorization was $318 million.
On Apr 27, 2022, Lazard announced a quarterly dividend of 47 cents per share on its outstanding common stock. The dividend will be paid out on May 20, to its stockholders of record as of May 9.
Lazard’s first-quarter performance was impressive. Although having a footprint in diverse geographies, steady capital-deployment activities and revenue growth position the company favorably for the long haul, elevated expenses pose a threat to 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 #4 (Sell). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Asset Managers
BlackRock, Inc.’s BLK first-quarter 2022 adjusted earnings of $9.52 per share outpaced the Zacks Consensus Estimate of $8.92. The figure reflects a rise of 18.4% from the year-ago quarter.
BLK’s results benefited from an improvement in revenues, partly offset by higher expenses. Moreover, long-term net inflows supported growth in the AUM balance.
Invesco’s IVZ first-quarter 2022 adjusted earnings of 56 cents per share missed the Zacks Consensus Estimate of 61 cents. The bottom line declined 17.6% from the prior-year quarter.
IVZ’s results were adversely impacted by a rise in operating expenses. However, improvement in revenues and solid growth in the AUM balance act as tailwinds.
SEI Investments Co.’s SEIC first-quarter 2022 earnings of $1.36 per share were in line with the Zacks Consensus Estimate. The bottom line reflects a 53% jump from the prior-year quarter.
SEIC’s results comprised a one-time early termination fee of $88 million or 47 cents per share, which was included in information processing and software servicing fees.
SEIC’s results were aided by revenue growth and an increase in the AUM balance. These were offset by a rise in expenses.
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