Lazard Ltd Reports First-Quarter 2021 Results

Operating revenue up 15% with strong momentum across our businesses

Record quarter-end assets under management of $265 billion

Returned $237 million of capital to shareholders in first quarter

Lazard Ltd (NYSE: LAZ) today reported operating revenue¹ of $648 million for the quarter ended March 31, 2021. Net income, as adjusted², was $101 million, or $0.87 per share (diluted) for the quarter.

First-quarter 2021 net income on a U.S. GAAP basis was $87 million, or $0.75 per share (diluted).

“We are well positioned for the year ahead with record assets under management and high levels of activity across Financial Advisory in a strengthening macroeconomic environment,” said Kenneth M. Jacobs, Chairman and Chief Executive Officer of Lazard. “As the rollout of COVID-19 vaccines expands, and fiscal and monetary stimulus take effect, confidence is growing among business leaders and investors globally.”

Note: Endnotes are on page 6 of this release. A reconciliation of adjusted GAAP to U.S. GAAP is on pages 11-12.

OPERATING REVENUE

Operating revenue was $648 million for the quarter ended March 31, 2021, 15% higher than the first 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.

Financial Advisory operating revenue was $317 million for the first quarter of 2021, 8% higher than the first quarter of 2020.

During and since the first 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 Brookfield Property Partners in Brookfield Asset Management’s acquisition of 100% of BPY units, valuing BPY at $71.8 billion; 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; Altice Europe in the $48.5 billion take-private offer by Patrick Drahi, and its $6.3 billion sale of its French towers to Cellnex; The Special Committee of the Board of Athene in Athene’s $11 billion merger with Apollo; Stonepeak’s $8.1 billion acquisition of Astound Broadband from TPG; M&T Bank’s $7.6 billion acquisition of People’s United Financial; Kimco Realty in its $5.9 billion merger with Weingarten Realty Investors; G4S on the £3.8 billion recommended cash offer from Allied Universal; Natixis in the €3.7 billion acquisition of the remaining 29.3% stake in the company by BPCE; Goodyear Tire & Rubber’s $2.5 billion acquisition of Cooper Tire & Rubber; Servier’s $2.0 billion acquisition of Agios Pharmaceuticals’ oncology business; and Five Prime Therapeutics’ $1.9 billion sale to Amgen.

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 first 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: Abengoa; AccorInvest; Assured Guaranty in connection with Puerto Rico’s restructuring; Belk; Cinepolis; CorpGroup; Debenhams; Diamond Offshore Drilling; Europcar; Express; Garrett Motion; NMC Health; Peabody; Premier Oil; Seadrill Limited; Ursa Piceance; and Valaris.

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 publicly announced Financial Advisory transactions on which Lazard advised in the first quarter of 2021, or continued to advise or completed since March 31, 2021, 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.

Asset Management operating revenue was $328 million for the first quarter of 2021, 22% higher than the first quarter of 2020.

Management fees and other revenue was $295 million, 10% higher than the first quarter of 2020, and 4% higher than the fourth quarter of 2020.

Average AUM for the first quarter of 2021 was $261 billion, 18% higher than the first quarter of 2020, and 6% higher than the fourth quarter of 2020.

AUM as of March 31, 2021, was $265 billion, up 2% from December 31, 2020, and up 37% from March 31, 2020. The sequential increase from December 31, 2020 was driven by market appreciation of $12.5 billion, partially offset by foreign exchange depreciation of $4.6 billion and net outflows of $1.7 billion.

Incentive fees during the period were $33 million, compared to $2 million for the first 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.

For the first quarter of 2021, we accrued adjusted compensation and benefits expense¹ at an adjusted compensation ratio of 59.5%, compared to the first-quarter 2020 ratio of 60.0%. This resulted in $385 million of compensation and benefits expense, compared to $338 million for the first quarter of 2020.

We manage our compensation and benefits expense based on awarded compensation with a consistent deferral policy. 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

For the first quarter of 2021, adjusted non-compensation expense¹ was $102 million, 9% lower than the first quarter of 2020, primarily reflecting lower travel and business development expenses.

The ratio of adjusted non-compensation expense to operating revenue was 15.8% for the first quarter of 2021, compared to 20.0% for the first 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 $41 million for the first quarter of 2021. The effective tax rate, on an adjusted basis, was 28.6% for the first quarter of 2021, compared to 28.8% for the first quarter of 2020 and 20.2% for the full year of 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 the first quarter of 2021, Lazard returned $237 million to shareholders, which included: $49 million in dividends; $123 million in share repurchases of our common stock; and $65 million in satisfaction of employee tax obligations in lieu of share issuances upon vesting of equity grants.

As of March 31, 2021, we have repurchased 2.9 million shares of our common stock at an average price of $42.30 per share.

On April 29, 2021, our Board of Directors authorized additional share repurchases of up to $300 million, which expires as of December 31, 2022, bringing our total outstanding share repurchase authorization to $439 million.

On April 29, 2021, Lazard declared a quarterly dividend of $0.47 per share on its outstanding common stock. The dividend is payable on May 21, 2021, to stockholders of record on May 10, 2021.

Lazard’s financial position remains strong. As of March 31, 2021, our cash and cash equivalents were $975 million, and stockholders’ equity related to Lazard’s interests was $765 million.

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CONFERENCE CALL

Lazard will host a conference call at 8:00 a.m. EDT on Friday, April 30, 2021, to discuss the company’s financial results for the first 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) 458-4121 (U.S. and Canada) or +1 (323) 794-2093 (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. EDT, Friday, April 30, 2021, via the Lazard Investor Relations website at www.lazard.com, 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 6389433.

ABOUT LAZARD

Lazard, one of the world's preeminent financial advisory and asset management firms, operates from more than 40 cities across 25 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.

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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 forward-looking statements, including with respect to the current COVID-19 pandemic, 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.

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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 the U.S. GAAP results, is the most meaningful and useful way to compare our operating results across periods.

² First-quarter 2021 adjusted results¹ exclude pre-tax charges of $1.4 million relating to office space reorganization and $9.6 million relating to expenses associated with restructuring and closing of certain offices. On a U.S. GAAP basis, these resulted in a net charge of $13.9 million, or $0.12 (diluted) per share, in the first quarter of 2021.

LAZ-EPE

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