Slide 1: Investor Presentation April 2020
Investor Presentation April 2020
Slide 2: Safe Harbor
Safe Harbor This presentation contains certain statements, estimates and forecasts with respect to future performance and events. These statements, estimates and forecasts are “forward-looking statements.” In some cases, forward-looking statements can be identified by the use of forward- looking ter
Slide 3: Our Firm
Our Firm Lazard’s mission is to provide trusted financial advice and investment solutions to our clients. We have built a global network of relationships with key decision makers in business, government and investing institutions. We operate as a local firm in local markets, and serves clients with
Slide 4: Leadership and Diversification
Leadership and Diversification Anticipating and meeting the evolving needs of clients Asset Management Financial Advisory Locally established Global Global platform built teams with global Equities M&A over decades of perspective Multi- $39B commitment to local Regional Restructuring markets I
Slide 5: Our Response to COVID-19
Our Response to COVID-19 Today the world is confronting a health pandemic of unprecedented proportion and impact. We took swift action that reflects our mission to support our employees, serve our clients, and contribute to our communities Provide Clients Insights Protect Our Employees Mobility & Co
Slide 6: Long-term Investment Thesis
Long-term Investment Thesis Lazard is a uniquely diversified, global financial advisory and investment manager with an established track record of performance Distinctive culture Seasoned expertise and people provide a and innovative insights sustainable foundation attract clients across through mac
Slide 7: Our Purpose is Serving Clients
Our Purpose is Serving Clients Culture is central to delivering for our clients and our long-term success “We aim to provide Clients first – Our success is derived from an ability to provide a unique perspective preeminent advice with unparalleled execution” Deliver excellence – Insight, innovation
Slide 8: Investor Highlights
Investor Highlights The Lazard Difference Investment Highlights Financial Strategy 7
Slide 9: The Lazard Difference
The Lazard Difference A firm built across centuries, structured around the needs of our clients Forward Thinking Premier Quality Brand of People 8
Slide 10: Premier Brand
Premier Brand Lazard is known globally for excellence, discretion, integrity and results One of the most Lazard’s top-tier brand A formidable reputation influential financial allows it to punch above its in the world’s boardrooms" institutions in the world" weight class" Showing bigger Success built
Slide 11: Quality of People
Quality of People Unique assemblage of experience, expertise, interests and characteristics 85+ Nationalities 25+ Average years of experience (MDs) 14 Average years of tenure (MDs) As of March 31, 2020 Experience Expertise Interests Characteristics 10
Slide 12: Forward Thinking
Forward Thinking Culture of innovation PIONEERING LEGACY CONTINUING INNOVATION EVOLUTION | | | 19th century 20th century 21st century • Private Banking • M&A • Capital Structure Advisory • Foreign Exchange • Restructuring • Structured Credit Advice • International Equity • Emerging Markets Debt • So
Slide 13: Technology Driven
Technology Driven We are well-positioned for a future hybrid work environment Remote collaboration Infrastructure & Analytics Customer-centric solutions Optimizing workflow connectivity Virtual network access Data privacy Real-time engagement through Secure remote-access Multi-factor authenticat
Slide 14: Proven Stability
Proven Stability The Lazard Difference Investment Highlights • Proven Stability • High Performance • Significant Opportunities for Growth Financial Strategy 13
Slide 15: Strong Operating Revenue Generation
Strong Operating Revenue Generation Significant scale provides stable platform through cycle $ in millions $3,000 $2,755 2,750 $2,655 $2,546 $2,489 2,500 $2,380 $2,340 $2,344 2,250 $2,015 $2,034 $1,979 $1,971 2,000 $1,884 1,506 1,388 1,357 1,322 1,750 $1,675 $1,571 $1,618 1,207 1,280 1,301 1,500 $1,
Slide 16: Lower Revenue Volatility than Peers
Lower Revenue Volatility than Peers Unique combination of stable businesses minimizes volatility over time OPERATING REVENUE VOLATILITY (2009 -2019) 1 0.55 0.36 0.19 0.16 0.12 2 2 2 2 Bulge Bracket Traditional AM Independent FA Alt. AM Peer samples do not include firms that no longer exist, which, i
Slide 17: Advisory Business in Global Top Tier
Advisory Business in Global Top Tier Lazard competes with the largest global banks LTM 1 ADVISORY REVENUE ($ IN MILLIONS) % OF TOTAL REVENUE Goldman Sachs $3,104 9% JPMorgan $2,236 2% Morgan Stanley $2,072 5% $1,322 53% Bank of America $1,280 1% Citi $1,267 2% UBS $797 3% Credit Suisse $684 3% Deuts
Slide 18: Stable Asset Management Business
Stable Asset Management Business Assets Under Management provides stability to long-term revenue generation Average AUM1 ($ in billions) $250 $241 $234 $233 $227 $196 $195 $195 200 $173 $152 $155 150 $132 $136 $124 $97 $102 100 50 0 2 1 Assets under management four-quarter average as of December 31
Slide 19: High Performance
High Performance The Lazard Difference Investment Highlights • Proven Stability • High Performance • Significant Opportunities for Growth Financial Strategy 18
Slide 20: High Performance
High Performance Performance across businesses leads to strong results $2.49bn $295mn $211mn Operating revenue LTM Financial Advisory operating Return of capital to revenue Q1 2020 shareholders Q1 2020 $563mn $269mn $193bn Q1 operating revenue Asset Management Assets under management operating reven
Slide 21: Increasing Market Share
Increasing Market Share Market share has grown significantly since Lazard’s IPO FINANCIAL ADVISORY MARKET SHARE 1 ACTIVE AUM MARKET SHARE 2 Lazard 9th 6th Rank +18% +97% 0.49% 8.2% 7.0% 0.25% 2005 2019 2005 2019 3 Source: Company filings, BCG reports. 1 Calculated as a percentage of the top ten fina
Slide 22: Financial Advisory Performance
Financial Advisory Performance Significant growth in earnings from operations Operating Revenue Earnings from Operations, ($ in millions) Awarded Basis ($ in millions) $1,600 $500 1,400 $1,322 400 1,200 1,000 300 800 200 600 400 100 200 0 0 1 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 20
Slide 23: Asset Management Performance
Asset Management Performance Doubling of AUM since financial crisis and stable fees drive earnings AUM1 Earnings from Operations, ($ in billions) Awarded Basis ($ in millions) $250 $233 $600 500 200 400 150 300 100 200 50 100 0 2 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 201
Slide 24: Significant Opportunities for Growth
Significant Opportunities for Growth The Lazard Difference Investment Highlights • Proven Stability • High Performance • Significant Opportunities for Growth Financial Strategy 23
Slide 25: Growth Framework
Growth Framework Stable foundation and high performance create multiple growth opportunities Inorganic growth • Team lift-outs • Acquisitions Ongoing investments • Geographic expansion • Selective hiring • Seeding new strategies Organic growth • Investment platform extensions • New advisory services
Slide 26: Investing in Financial Advisory Growth
Investing in Financial Advisory Growth Increasing our total addressable market by scaling the franchise 2006 – 2017 Built inbound and outbound M&A 2016 advisory team in China Acquired banking boutique to serve growing Canadian business Minneapolis Toronto Beijing Chicago 2013 – 2017 Tokyo Expanded p
Slide 27: Financial Advisory Diversity of Revenues
Financial Advisory Diversity of Revenues Sophisticated, local financial expertise, paired with global execution capabilities Mergers & Public & Shareholder Restructuring Sovereign Acquisition Private Capital Advisory Advisory Advisory Advisory Advisory • Activism • Chapter 11 • Public/private • Equi
Slide 28: Ability to Innovate, Scale Investment Strategies
Ability to Innovate, Scale Investment Strategies New strategies represent half of our total AUM NEW STRATEGIES 1 AS % OF TOTAL AUM 54% 50% 49% 45% 46% 40% 35% 30% 28% 23% 19% 20% 15% 5% 5% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Note: Data excludes Lazard Frères Ge
Slide 29: Investment Strategies Scaled in Recent Years
Investment Strategies Scaled in Recent Years Demonstrated ability to seed new portfolios and scale quickly Strategy/Platform Inception Current AUM ($B) Quantitative Equity Platform 2008 ~$15 Global Listed Infrastructure 2005 ~$13 International Strategic Equity 2001 ~$12 Scaled Strategies Emerging Ma
Slide 30: Financial Strategy
Financial Strategy The Lazard Difference Investor Highlights Financial Strategy 29
Slide 31: Discipline on Costs
Discipline on Costs Consistency in compensation and non-compensation expenses while increasing investment 80% Target ranges1 established in 2012 72% Comp: 55% to 59% 70% Non-comp: 16% to 20% 70% 68% 67% 62% 62% 59.4% 58.2% 56.3% 56.0% 56.2% 55.6% 55.8% 57.7% 60% 50% 40% 30% 22% 21% 21% 21.4% 19.6% 1
Slide 32: Focus on Operating Margins
Focus on Operating Margins Increased revenues and cost management has resulted in significant impact on operating margin, awarded basis 25.4% 19.3% 12.7% 2005-2009 2010-2013 2014-2019 Average Average Average 31
Slide 33: Operating Margin Growth
Operating Margin Growth Operating margin, awarded basis increased in both businesses since 2005 FINANCIAL ADVISORY ASSET MANAGEMENT 41% 28% 37% 20% 28% 19% '05-'09 '10-'13 '14-'19 '05-'09 '10-'13 '14-'19 Average Average Average Average Average Average Segment results exclude expenses not directly as
Slide 34: Capital Management Strategy
Capital Management Strategy Commitment to shareholder value creation Gradually increase common dividend over time Repurchase shares to offset dilution from year-end share-based compensation Retain appropriate cash balance to support operations, accruals consistent with our business, and regula
Slide 35: Strong Balance Sheet and Liquidity
Strong Balance Sheet and Liquidity Disciplined leverage profile and consistent access to capital markets provides flexible balance sheet to navigate varying market environments Balanced debt profile with long-term maturities ($ in millions) Strong liquidity profile $150 Current cash and cash equiv
Slide 36: Significant Cash Generation
Significant Cash Generation Total capital return provides significant capital return to shareholders in addition to offsetting dilution from stock-based compensation $ in millions $1,200 $1,023 $1,000 $268 $850 $800 $692 $716 $253 $584 $600 $273 $261 $396 $416 $424 $227 $400 $341 $95 $102 $236 $206
Slide 37: Strong Capital Returns to Shareholders
Strong Capital Returns to Shareholders Balancing dividend growth and share repurchases through the cycle Annual Dividends Share Repurchases (Shares in millions) 3.5 4.1 3.4 8.6 7.0 12.2 13.7 2.9 $3.00 Shares Outstanding 135.4 134.1 133.3 132.9 132.7 $1.30 $1.20 2.00 $1.20 $0.50 126.8 $1.00 $1.88 $1.
Slide 38: Supplemental Financial Information
Supplemental Financial Information
Slide 39: Corporate Structure & Tax Reform Considerations
Corporate Structure & Tax Reform Considerations Bermuda corporation with common stock traded on the NYSE ─ Corporate governance structure consistent with U.S. peers and files annual proxy statement Corporate • Files 10-K and 10-Q with SEC, including IRS Employer Identification Number Structure ─ Par
Slide 40: U.S. GAAP Selected Financial Information
Unaudited U.S. GAAP Selected Financial Information ($ in millions) 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Q1 '20 Net revenue $1,301 $1,494 $1,918 $1,557 $1,531 $1,905 $1,830 $1,912 $1,985 $2,300 $2,354 $2,333 $2,644 $2,826 $2,587 $538 % Growth 15% 28% (19%) (2%) 2
Slide 41: Reconciliation of U.S. GAAP Net Revenue to Operating Revenue
Unaudited Reconciliation of U.S. GAAP Net Revenue to Operating Revenue ($ in millions) 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Q1 '20 Net revenue - U.S. GAAP Basis $1,301 $1,494 $1,918 $1,557 $1,531 $1,905 $1,830 $1,912 $1,985 $2,300 $2,354 $2,333 $2,644 $2,826 $2,
Slide 42: Reconciliation of U.S. GAAP Compensation to Adjusted/Awarded Compensation
Unaudited Reconciliation of U.S. GAAP Compensation to Adjusted/Awarded Compensation ($ in millions) 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Q1 '20 Compensation and benefits expense - U.S. GAAP basis $699 $891 $1,123 $1,128 $1,309 $1,194 $1,169 $1,351 $1,279 $1,314
Slide 43: Reconciliation of U.S. GAAP Non-Compensation Expense
Unaudited Reconciliation of U.S. GAAP Non-Compensation Expense to Non-Compensation, As Adjusted ($ in millions) 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Q1 '20 Non-Compensation expense - U.S. GAAP basis $260 $275 $376 $404 $404 $468 $425 $437 $490 $467 $1,051 $475 $
Slide 44: Reconciliation of U.S. GAAP Net Income to Net Income, As Adjusted
Unaudited Reconciliation of U.S. GAAP Net Income to Net Income, As Adjusted ($ in millions, except per share values) 2012 2013 2014 2015 2016 2017 2018 2019 Q1 '20 Net income attributable to Lazard Ltd - U.S. GAAP Basis $84 $160 $427 $986 $388 $254 $527 $287 $64 Adjustments: 2 Charges pertaining to
Slide 45: Earnings from Operations – As Adjusted/Awarded
Earnings from Operations – As Adjusted/Awarded ($ in millions) 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 As Adjusted Operating Revenue $1,358 $1,571 $2,015 $1,675 $1,618 $1,979 $1,884 $1,971 $2,034 $2,340 $2,380 $2,344 $2,655 $2,755 $2,546 Compensation and benefits 7
Slide 46: Supplemental Segment Information
Non-GAAP - Unaudited Supplemental Segment Information ($ in millions) Financial Advisory Asset Management Corporate 1 2016 2017 2018 2019 2016 2017 2018 2019 2016 2017 2018 2019 1 1 2 Operating Revenue $1,301 $1,388 $1,506 $1,357 $1,031 $1,240 $1,242 $1,159 $2,344 $2,655 $2,755 $2,546 % Growth 2% 7%
Slide 47: Reconciliation of Operating Income to Earnings from Operations, Awarded Basis
Unaudited Reconciliation of U.S. GAAP Operating Income to Earnings from Operations, Awarded Basis ($ in millions) Financial Advisory Asset Management Corporate Total 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 Net Revenue - U.S. GAAP Basis $1,2
Slide 48: Reconciliation of Operating Income to Earnings from Operations, Awarded Basis
Unaudited Reconciliation of U.S. GAAP Operating Income to Earnings from Operations, Awarded Basis ($ in millions) Financial Advisory Asset Management 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 Net Revenue - U.S. GAAP Basis $1,120 $992 $1,049 $981 $1,207 $850 $897 $896 $1,039 $1,135 Adjustment
Slide 49: Reconciliation of Operating Income to Earnings from Operations, Awarded Basis
Unaudited Reconciliation of U.S. GAAP Operating Income to Earnings from Operations, Awarded Basis ($ in millions) Financial Advisory Asset Management 2005 2006 2007 2008 2009 2005 2006 2007 2008 2009 Net Revenue - U.S. GAAP Basis $865 $973 $1,240 $1,023 $987 $466 $553 $725 $615 $602 Adjustments (a):
Slide 50: Estimated Future Amortization of Historical Deferrals
1 Estimated Future Amortization of Historical Deferrals ($ in millions) 2018A 2019A 2020E 2021E 2022E 2014 Grants 9 – – – – 2015 Grants 59 8 – – – 2016 Grants 109 53 6 – – 2017 Grants 183 96 60 8 – 2018 Grants 15 191 95 62 16 2019 Grants – 18 201 110 64 2020 Grants – – TBD TBD TBD Other 1 2 28 20 20
Slide 51: Endnotes related to non-GAAP adjustments
Endnotes related to non-GAAP adjustments 1 For the years ended December 31, 2013 and 2012, represents charges pertaining to cost saving initiatives including severance and benefit payments, acceleration of unrecognized amortization of deferred incentive compensation previously granted to individuals
Slide 52: Endnotes related to non-GAAP adjustments (continued)
Endnotes related to non-GAAP adjustments (continued) 13 For the year ended December 31, 2013, represents charges related to the refinancing of the Company’s 7.125% Senior Notes maturing on May 15, 2015 and the issuance of $500 million of 4.25% Senior Notes maturing on November 14, 2020. The charges
Slide 53: Endnotes related to non-GAAP adjustments (continued)
Endnotes related to non-GAAP adjustments (continued) 20. For the year ended December 31, 2016 represents a gain relating to the Company’s acquisition of MBA Lazard resulting from the increase in fair value of the Company’s investment in the business. For the year ended December 31, 2015 represents r