Lazard, Inc. · NYSE:LAZ
Lazard — Investor Presentation (October 2011)
46 slides from Lazard's investor presentation, October 2011
Slide 1: Company Overview
Company Overview October 2011
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 termi
Slide 3: Key Investment Highlights
Key Investment Highlights Intellectual capital model – Financial Advisory and Asset Management – well positioned for revenue growth globally Solid year to date performance underscores the power of our model Focused on realizing operating leverage Strong financial and liquidity position; soli
Slide 4: Intellectual Capital Model – Positioned for Growth
Intellectual Capital Model – Positioned for Growth LAZARD Established 1848 Financial Advisory Asset Management Largest global independent financial World class global institutional asset advisory firm manager Deep reservoir of senior bankers 90% institutional; 82% equities globally Geograp
Slide 5: Only Global-Scale Independent Advisory Firm
Only Global-Scale Independent Advisory Firm UNITED STATES New York, San Francisco, Chicago, CHINA Houston, Los Angeles, Boston, CANADA Hong Kong, Washington, D.C., Minneapolis, Financial Advisory – 140 MDs Beijing Charlotte UNITED KINGDOM JAPAN North America – 431 Professionals FRANCE Europe/Mid
Slide 6: Balanced Across Geography And Business Lines
Balanced Across Geography And Business Lines LTM1 Revenue by Geography LTM1 Revenue by Business Line Rest of World 9% Asset Financial Europe North Management Advisory 34% America 46% 54% 57% Note: Represents operating revenue from Financial Advisory and Asset Management segments (excludes Corporate)
Slide 7: Lazard Revenue Growth: Peak to Peak (2000/2007)
Lazard Revenue Growth: Peak to Peak (2000/2007) ($ in millions except M&A data, which is in billions) Lazard revenue growth outperformed global completed M&A volume and the MSCI World index from 2000 to 2007 $5,000 7% 4,000 $3,974 $3,703 3,000 30% 56% 2,000 $2,015 62% 57% $1,589 1,000 $1,221 $1,29
Slide 8: Lazard Revenue Growth: Trough to Trough (2002/2009)
Lazard Revenue Growth: Trough to Trough (2002/2009) ($ in millions except M&A data, which is in billions) Lazard revenue growth outperformed global completed M&A volume and the MSCI World index from 2002 to 2009 $2,000 26% 58% $1,704 1,500 47% $1,618 86% $1,357 1,000 $1,168 31% $1,022 $990 $792 50
Slide 9: Solid Performance in a Challenging Environment
Solid Performance in a Challenging Environment Quarterly Operating Revenue ($mm) Quarterly AUM ($bn) $700 $200 $610 600 175 $162 $155 $161 $514 $144 $473 $492 150 $135 $136 500 $457 $457 $467 $130 $431 $438 $203 $120 $123 $399 125 400 $153 $221 $200 $98 $162 $167 $184 $207 100 $133 $81 300 $273 $107
Slide 10: Core Operating Business Revenue Back to Historical Record Levels
Core Operating Business Revenue Back to Historical Record Levels ($ in millions) $1,958 $1,956 $2,017 $1,653 $1,586 $1,522 $717 $835 $934 $1,329 $629 $596 $549 $988 $1,041 $1,074 $464 $962 $350 $417 $410 $455 $1,241 $1,121 $1,083 $973 $1,024 $990 $865 $691 $657 $552 $533 2001 2002 2003 2004 2005 200
Slide 11: Opportunities For Growth
Opportunities For Growth Revenue Growth Capital shifts in developed & developing markets driving secular growth in Advisory & Asset Management businesses Increased demand for independent advice Broadening strategic advisory services; adding senior talent Investing in new Asset Management p
Slide 12: Compensation Policies
Compensation Policies Our goal is to grow compensation expense at a slower rate than revenue In managing our business, our focus is on annual notional compensation1 as it reflects the actual cost of compensation in a given year Deferred component of 2010 year-end incentive awards was 38% of to
Slide 13: Strong Financial and Liquidity Position
Strong Financial and Liquidity Position ($ in millions, except as noted) Solid low-risk balance sheet $1.0 billion in cash No scheduled long-term debt maturities before May 2015 No principal trading or lending book Long-term debt of $1,077 at September 30, down $150 since June 30 Stockho
Slide 14: Financial Advisory
Financial Advisory
Slide 15: Financial Advisory Summary
Financial Advisory Summary ($ in millions) Operating Revenue Summary $1,400 Operating revenue of $732 in the first nine $1,241 months of 2011 compared to $769 in the 1,200 $1,121 first nine months of 2010 $1,024 $990 $973 17% increase in M&A, Strategic and 1,000 $865 Capital Advisory revenue, of
Slide 16: Advisory Revenue Ranks Among the Largest Firms
Advisory Revenue Ranks Among the Largest Firms % OF ($ in millions) TOTAL LTM ADVISORY REVENUE REVENUE1 Goldman Sachs $2,145 8% JP Morgan Chase $1,819 3% Morgan Stanley $1,815 5% Bank of America $1,309 3% 2 Credit Suisse $1,134 5% Lazard $1,083 54% 2 UBS $1,076 4% Deutsche Bank 2 $877 4% Citigroup $
Slide 17: Financial Advisory Operating Revenue
Financial Advisory Operating Revenue ($ in millions) Strong revenue growth – M&A and Strategic Advisory, Capital Markets and Other Advisory operating revenue increased 14% for the third quarter 2011 Restructuring revenue reduces volatility through cycles $1,241 $1,121 $1,083 $973 $1,024 $990 $86
Slide 18: Financial Advisory Revenue Growth Excluding Restructuring
Financial Advisory Revenue Growth Excluding Restructuring % CAGR YTD 111/YTD 091 35% 32% 25 23% 23% 21% 19% 18% 15 12% 8% 6% 5% 5 (2%) (5) Evercore Deutsche Lazard2 Credit Greenhill Morgan Goldman Bank of UBS JP Morgan Citigroup Bank Suisse Stanley Sachs America Chase 1Through September 30. 2Exclude
Slide 19: Multiple Drivers Of Growth In Financial Advisory
Multiple Drivers Of Growth In Financial Advisory Increasing demand for independent strategic advice Providing broader range of advisory services & Other Advisory Capital Markets Clients: corporations / governments / sovereign funds / Restructuring Acquisitions Mergers & financial sponsors Ge
Slide 20: Diversified Financial Advisory Business
Diversified Financial Advisory Business LTM1 M&A Revenue By Industry Diversified geographically Advised on transactions in over 40 Gov’t countries in 2010 2% Real Diversified by industry and client base Estate Advised on over 350 transactions, 5% across a broad range of industries in FIG 201
Slide 21: Selected Pending M&A Transactions
Selected Pending M&A Transactions1 Industrials TMT Healthcare & Consumer Power & Energy Motorola Express Dollar Thrifty Duke Energy Mobility Scripts 4 The Carlyle Lafarge Microsoft Group, Hellman NSTAR & Friedman Apple, EMC, Plan to Ericcsson, Microsoft, Caris Life CNOOC Separate RIM, Sony Sciences
Slide 22: The Global M&A Cycle
The Global M&A Cycle Value $tn % of Value $60 16% $53.1 11% $43.2 $44.2 $43.9 45 12% 10% $36.3 $35.7 $33.2 $31.5 $28.3 30 $27.0 8% $24.6 8% 8% Average 7.1% $23.6 7% 6% 6% 6% 6% 5% 5% 15 5% 4% 3.2 3.4 2.7 3.5 4.2 1.7 1.2 1.4 1.9 2.7 1.9 2.4 0% 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 20
Slide 23: Market Leading Restructuring Practice
Market Leading Restructuring Practice Debtor Market Share – 25 Largest Most experienced team – advised on more Chapter 11 Bankruptcies1,2 than 500 restructurings worldwide over the past decade Rothschild Gordian Greenhill 4% 4% 4% Largest company-focused restructuring group Houlihan with nearly
Slide 24: Selected Recent Restructuring And Debt Advisory Assignments
Selected Recent Restructuring And Debt Advisory Assignments Professional/ Gaming/ Technology/ Financial Paper and Packaging Media/Telecom Entertainment/ Services Hospitality Indianapolis Downs LLC Other MSR Resorts Healthcare (GIC Real Estate) Caribe Media 23
Slide 25: Asset Management
Asset Management
Slide 26: Asset Management Summary
Asset Management Summary ($ in millions) Operating Revenue Summary Record operating revenue YTD $900 $835 Operating revenue increased 4% over $717 3Q10 and 17% over the first nine $678 months of 2010 $629 $596 Net outflows of $0.8bn in the first nine 600 $549 months of 2011; $9.3bn net inflows
Slide 27: Assets Under Management
Assets Under Management1 ($ in billions) Improving investment performance and launch of new strategies led to $39.7 in net inflows post 2005 vs. $10.8 in net outflows in the five years prior to 2005 Net inflows of $9.3 in 2010; net outflows of $0.8 in the first nine months of 2011 $155 $141 $136
Slide 28: Multiple Drivers Of Growth In Asset Management
Multiple Drivers Of Growth In Asset Management Winning new mandates across a broad spectrum of investment strategies around the globe HNW Private Client Asset Management Providing a wide range of investment solutions New Businesses Institutional Geographically diversified client base Buildin
Slide 29: Selected Significant Recent New Mandates
Selected Significant Recent New Mandates Client Type Investment Strategy UK Pension Emerging Markets Debt European Pension Fund Developing Markets Equity U.S. Corporation Quantitative Equities Asian Corporation Global Equities U.S. Pension Fund Emerging Markets Equity European Corporation European D
Slide 30: Geographic Mix
Geographic Mix AUM By Office Domicile1 Local Presence – Selected Offices Asia-Pacific: 14% Japan 3% Korea 1% New York Boston North Australia 10% America San Francisco Germany 8% North France America London Frankfurt/ 11% 52% Europe Hamburg Milan Paris Europe: 34% U.K. 15% Seoul Syd
Slide 31: Diversified Product Mix – AUM By Product
Diversified Product Mix – AUM By Product1 More than 15 strategies with over $1.5bn in AUM History of investing prudently wherever the firm finds value U.S. Fixed Income Alternative 2% Private Equity Investments 1% 4% Global/Int'l Fixed Income 11% U.S. Equity 13% Global Equity 49% Non-U.S. and Re
Slide 32: Summary Financials
Summary Financials
Slide 33: Note
Note Lazard believes that pro forma results assuming full exchange of outstanding exchangeable interests and results excluding special charges provide the most meaningful basis for comparison among present, historical and future periods. The Company’s quarterly revenue and profits can fluctuate mate
Slide 34: Selected Financial Data
Selected Financial Data ($ in millions, except per share values) Nine Months % Full Year % 20111 20102 Inc/Dec 20102 2009 Inc/Dec Operating Revenue Financial Advisory $731.7 $769.1 (5%) $1,120.6 $990.3 13% Asset Management 678.3 578.9 17% 834.6 596.0 40% 3 Core Operating Business Revenue 1,410.0 1,3
Slide 35: Operating Revenue – Q3 11 vs. Q3 10
Operating Revenue – Q3 11 vs. Q3 10 ($ in millions) Q3 2011 2010 Change % Financial Advisory M&A and Strategic Advisory $199.1 $160.6 24% Capital Markets & Other 16.4 27.8 (41%) Subtotal 215.5 188.4 14% Restructuring 38.1 66.0 (42%) Total 253.6 254.4 (0%) Asset Management Management Fees 200.0 184.0
Slide 36: Net Income Summary – Q3 11 vs. Q3 10
Net Income Summary – Q3 11 vs. Q3 10 ($ in millions, except per share figures) Q3 20111 2010 % Change Operating Revenue $466.5 $473.2 (1%) Compensation and Benefits 276.7 281.8 (2%) Non-Compensation Expenses 98.6 89.2 11% Total Operating Expenses 375.3 371.0 1% Earnings from Operations 91.2 102.2 (1
Slide 37: Operating Expenses – Q3 11 vs. Q3 10
Operating Expenses – Q3 11 vs. Q3 10 ($ in millions) Q3 2011 2010 Compensation and Benefits 1,2 $276.7 $281.7 % of Operating Revenue 59.3% 59.5% Non-Compensation Expenses: 1 Occupancy and equipment $24.4 $22.4 Marketing and business development 19.8 17.5 Technology and information services 20.4 18.9
Slide 38: Operating Revenue – Nine Months 2011 vs. Nine Months 2010
Operating Revenue – Nine Months 2011 vs. Nine Months 2010 ($ in millions) Nine Months 2011 2010 % Change Financial Advisory M&A and Strategic Advisory $533.5 $454.1 17% Capital Markets & Other 76.2 69.0 10% Subtotal 609.7 523.1 17% Restructuring 122.0 246.0 (50%) Total 731.7 769.1 (5%) Asset Managem
Slide 39: Net Income Summary – Nine Months 2011 vs. Nine Months 2010
Net Income Summary – – Nine Months 2011 vs. Nine Months 2010 ($ in millions, except per share figures) Nine Months 2011 1 2010 2 % Change Operating Revenue $1,415.1 $1,368.4 3% Compensation and Benefits 831.2 818.5 2% Non-Compensation Expenses 291.0 259.5 12% Total Operating Expenses 1,122.2 1,078.0
Slide 40: Operating Expenses – September YTD
Operating Expenses – September YTD ($ in millions) Nine Months 2011 2010 % Change 3 Compensation and Benefits 1, 2 $831.2 $818.5 1.6% % of Operating Revenue 58.7% 59.8% Non-Compensation Expenses: 2 Occupancy and equipment $70.0 $65.0 Marketing and business development 58.8 51.4 Technology and inform
Slide 41: Operating Revenue – 2010 vs. 2009
Operating Revenue – 2010 vs. 2009 ($ in millions) Full Year 2010 2009 Increase/(Decrease) Financial Advisory M&A and Strategic Advisory $714.1 $526.2 $187.9 36% Capital Markets & Other Advisory 112.6 87.4 25.2 29% Subtotal 826.7 613.6 213.1 35% Restructuring 293.9 376.7 (82.8) (22%) Total 1,120.6 99
Slide 42: Net Income Summary – 2010 vs. 2009 – Excluding Restructuring and Special Charges
Net Income Summary – 2010 vs. 2009 – Excluding Restructuring and Special Charges Full Year ($ in millions, except per share figures) 2010 1 2009 % Change Operating Revenue $1,978.5 $1,617.6 22% Compensation and Benefits 1,166.2 1,160.5 0% Non-Compensation Expenses 368.2 336.7 9% Total Operating Expe
Slide 43: Selected Quarterly Operating Results
Selected Quarterly Operating Results ($ in millions, except per share data) Q3 11 Q2 11 Q1 11 Q4 10 Q3 10 Q2 10 Q1 101 Q4 092 Q3 09 Financial Advisory M&A and Strategic Advisory $199.1 $170.6 $163.8 $260.0 $160.6 $145.9 $147.6 $170.2 $124.7 Capital Markets & Other Advisory 16.4 30.3 29.5 43.6 27.8 1
Slide 44: Condensed Balance Sheet
Condensed Balance Sheet ($ in millions) September 30, December 31, 2011 2010 ASSETS Cash & Cash Equivalents $989.9 $1,209.7 Deposits with Banks and Segregated Cash 334.1 449.5 Receivables 595.4 568.7 Investments 346.9 417.4 Property 150.7 150.5 Goodwill 394.4 361.4 Other Assets 325.1 265.3 Total Ass
Slide 45: Detailed Balance Sheet Information
Detailed Balance Sheet Information ($ in millions) September 30, 2011 Key Comments Cash & Cash Equivalents $989.9 Mostly US Government and Agency money market funds and bank balances Deposits with Banks $267.9 Represents LFB’s short-term deposits, principally with the Banque de France Cash Depos
Slide 46: LAZARD
LAZARD