Lazard, Inc. · NYSE:LAZ
Lazard — Q1 2007 Earnings Presentation
32 slides from Lazard's earnings presentation, May 2007
Slide 1: Company Overview
LAZARD Company Overview May 2007
Slide 2: Disclaimer
Disclaimer 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 term
Slide 3: Overview
Overview We believe we are well-positioned within our industries Our business model is simple, has worked and we believe will continue to work Our strategy is to combine vision for the future with financial discipline We see significant opportunities for growth We continue to invest for th
Slide 4: We've Done What We Set Out To Do
We’ve Done What We Set Out To Do Stabilized and strengthened our team Incentivized and retained our people Continued to maintain compensation packages that are competitive in the marketplace Achieved strong revenue growth Solidified our M&A franchise, with continued involvement in important transact
Slide 5: What Makes Lazard Special?
What Makes Lazard Special? Preeminent financial services firm, committed to excellence ⎯ Focused on intellectual rigor, integrity, creating value for clients Simple business model with significant operating leverage ⎯ Premier independent, global M&A franchise ⎯ A market leading restructuring pra
Slide 6: Our Business
Our Business $1,571m 2006 operating revenue ($388m 1Q07) LAZARD 2,181 employees1 Offices in 29 cities Established 1848 in 16 countries2 Financial Advisory Asset Management $973m 2006 operating revenue $548m 2006 operating revenue ⎯ $223m 1Q07 ⎯ $147m 1Q07 M&A, Restructuring, Corporate
Slide 7: Financial Performance Highlights: 1Q07
Financial Performance Highlights: 1Q07 Achieved record first-quarter operating revenue of $388 million vs. $351 million in 1Q06 Net income on a fully-exchanged basis of $55 million or $0.47 per share (diluted) in 1Q07 vs. $53 million or $0.51 per share (diluted) in 1Q06 Financial Advisory Asset
Slide 8: Business Balanced Across Geography And Product Lines
Business Balanced Across Geography And Product Lines LTM1 Revenue by LTM1 Revenue by Geography Business Line Rest of World 4% Asset North Management Europe Financial America 37% 44% Advisory 52% 63% Note: Represents operating revenue from Financial Advisory and Asset Management segments (excludes Co
Slide 9: Growth Opportunities
Growth Opportunities Financial Advisory Asset Management Continued demand for Selected international/global independent advice products Increased productivity of Global expansion senior bankers Well-positioned for cross- Hedge funds border activity Merchant banking A market leading r
Slide 10: Financial Advisory
LAZARD Financial Advisory
Slide 11: Financial Advisory: Distinguishing Characteristics
Financial Advisory: Distinguishing Characteristics GLOBAL SCOPE… …Differentiated presence INDEPENDENCE… in major business capitals RELATIONSHIPS… …Objective advice free worldwide combines …Strong and enduring from structural conflicts multinational capabilities relationships built on that can exist
Slide 12: Differentiated Competitive Position
Differentiated Competitive Position Boutiques ital Lim ima l Cap nce s Geo ited Min ets Prese i s o r y i n e ss Foc graphi Mark i A d v e Bu s us c Cor Generalist Senior Coverage Banker Focus Integrated/Universal Banks Industry Independence Sector Expertise al Pro cip Len prieta Prin ding di n r y
Slide 13: Key Highlights
Key Highlights ($ in millions) ($ in millions) Financial Advisory Revenue Highlights $1,200 M&A core growth engine $973 ⎯ 17% growth in 2006 1,000 $865 +13% ⎯ Strong pipeline 800 Bolstered by growth in Private 600 Fund Advisory, PIPEs and Registered Direct Offerings 400 businesses $222 $223 200
Slide 14: Selected Pending M&A Transactions
Selected Pending M&A Transactions Client Origin/ Client Transaction Description Counterparty Origin Size Merger with ABN Amro $91.3 Agreement with Enel concerning transaction with respect to Endesa €43.7 Sale to an investor group led by KKR and TPG $45.0 Merger with Suez €37.8 Merger with Nuon1 €24.
Slide 15: Selected Pending M&A Transactions (cont'd)
Selected Pending M&A Transactions (cont’d) Client Origin/ Client Transaction Description Counterparty Origin Size Merger of ABC Radio with Citadel Broadcasting $2.4 Acquisition of the medical nutrition business of Novartis $2.5 Merger with Rural Press A$2.9 Sale to Hellman & Friedman1 $1.7 Sale to G
Slide 16: Diversified Across Industries and Geographies
Diversified Across Industries and Geographies LTM1 M&A LTM1 Financial Advisory Revenue by Industry Revenue by Geography Real Power & Estate Gov't Rest of 6% 1% World Energy 2% 7% Industrials 26% Consumer 14% North Europe America Life 48% 50% TMT Sciences 14% 17% FIG 15% 1 Latest twelve months ended
Slide 17: The M&A Cycle
The M&A Cycle M&A as % of U.S. Market Cap 15% 13% 13% 12% 12% Mean: 8% 11% 10% 10% 9% 9% 8% 8% 8% 8% 7% 7% 7% 6% 6% 4% 4% 4% 3% 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 20 20 20 20 20 20 20 20 Poised for Continued Growth Source
Slide 18: Restructuring Practice Balances M&A Through the Cycle
Restructuring Practice Balances M&A Through the Cycle ($ in billions) M&A and Restructuring Activity Historical Revenue Mix $4,000 $180 100% 4% 10% 13% 8% 90% 17% $3,500 $160 24% 80% 37% $140 $3,000 70% $120 $2,500 60% $100 $2,000 50% 96% $80 90% 92% 83% 87% $1,500 40% 76% $60 63% 30% $1,000 $40 20%
Slide 19: A World Leading Restructuring Practice
A World Leading Restructuring Practice Involved in Many of the Largest, Selected Current Assignments Most Important Restructurings Automotive Airlines Other Widely Recognized Restructuring Franchise 18
Slide 20: Asset Management
LAZARD Asset Management 19
Slide 21: Asset Management: Distinguishing Characteristics
Asset Management: Distinguishing Characteristics GLOBAL REACH WITH LOCAL PRESENCE... …Research, portfolio management, BROADLY DIVERSIFIED mandates, clients and offices in North TALENTED TEAM… PRODUCT MIX... America, Europe, Asia and Australia… …685 employees around the …Equities, fixed income and wo
Slide 22: Key Highlights
Key Highlights ($ in millions) Asset Management Revenue Highlights Three-year plan has been a $700 success 600 $548 Benefiting from investments $464 +18% 500 in talent and global 400 distribution 300 Gathering assets in global, regional and US strategies 200 $147 +23% Winning new mandates wi
Slide 23: Geographic Mix
Geographic Mix AUM by Office Domicile1 Local Presence Asia-Pacific 10% New York Minneapolis Japan North Australia 1% Korea America Italy 9% < 1% San Francisco 1% Germany London Frankfurt/ Europe 38% 9% Hamburg Europe North Milan Paris France America (LFG/FPG) 11% 52% Tokyo Seoul As
Slide 24: Product Mix
Product Mix AUM by Product1 U.S. Fixed Cash Alternative Merchant Income 2% Investments Banking 2% 3% 1% Closed-End Int'l Small Cap Other Global/ 4% Int'l Equity 1% 1% International Select Fixed Non-U.S. 10% Income and Int'l Equity Plus 8% Regional 2% Equity Australian U.S. Equity Equity European 43%
Slide 25: First-Quarter 2007 Financials
First-Quarter 2007 Financials Note: Lazard believes that pro forma results assuming full exchange of outstanding exchangeable interests provide the most meaningful basis for comparison among present, historical and future periods. The Company’s quarterly revenue and profits can fluctuate materially
Slide 26: Highlights
Highlights Net income on a fully-exchanged basis of $55m, compared to $53m in 1Q06 Net income per share (diluted) on a fully exchanged basis of $0.47, compared to $0.51 in 1Q06 Financial Advisory ⎯ Record first-quarter M&A revenue of $196m, compared to $194m in 1Q06 ⎯ Corporate Finance and Oth
Slide 27: Operating Revenue – 1Q07 vs. 1Q06
Operating Revenue – 1Q07 vs. 1Q06 ($ in millions) 2007 2006 Increase/(Decrease) Financial Advisory M&A $196.1 $194.0 $2.1 1% Financial Restructuring 9.6 13.6 (4.0) (29%) Corporate Finance & Other 16.9 14.5 2.4 16% Total 222.6 222.1 0.5 0% Asset Management Management Fees 130.6 103.8 26.8 26% Incenti
Slide 28: Net Income Summary – 1Q07 vs. 1Q06
Net Income Summary – 1Q07 vs. 1Q06 ($ in millions, except per share figures) 2007 2006 % Inc/(Dec) Operating Revenue $388.2 $351.1 11% Net Revenue $369.2 $336.3 Operating Expenses: Compensation and Benefits 220.0 200.1 10% Other Operating Expense 70.9 58.1 22% Operating Income $78.3 $78.1 0% Pro-For
Slide 29: Operating Expenses – 1Q07 vs. 1Q06
Operating Expenses – 1Q07 vs. 1Q06 ($ in millions) % of Operating Revenue 2007 2006 2007 2006 Compensation & Benefits $220.0 $200.1 56.7% 57.0% Other Operating Expense: Premises and Occupancy $18.1 $16.6 Professional Fees 16.2 14.9 Travel & Entertainment 12.5 8.9 One-time cost recovery items - (3.7)
Slide 30: Pro Forma Operating Margin by Business
Pro Forma Operating Margin by Business ($ in millions) FINANCIAL ADVISORY ASSET MANAGEMENT 1Q 2007 FY2006 FY2005 1Q 2007 FY2006 FY2005 Operating Revenue $222.6 $973.4 $865.3 $146.9 $548.5 $463.7 Operating Expenses 173.0 722.2 651.8 111.0 418.0 360.4 Operating Income $49.6 $251.2 $213.5 $35.9 $130.5
Slide 31: Selected Quarterly Operating Results
Selected Quarterly Operating Results ($ in millions, except per share data) Pro Forma Pro Forma 1Q07 4Q06 3Q06 2Q06 1Q06 4Q05 3Q05 2Q05 Financial Advisory M&A $196.1 $247.5 $153.2 $197.9 $194.0 $183.0 $187.2 $182.0 Financial Restructuring 9.6 20.4 15.6 21.0 13.6 23.0 40.0 16.3 Corporate Finance and
Slide 32: Lazard
LAZARD