) second-quarter 2013 adjusted earnings reached 45 cents per
share, significantly outpacing the Zacks Consensus Estimate of 31
cents. Moreover, this compares favorably with the prior-quarter
earnings of 28 cents.
Better-than-expected results reflect a strong top-line
performance, primarily aided by elevated financial advisory
revenues. Moreover, the company exhibited a strong capital
position. However, decrease in assets under management (AUM)
levels and a rise in expenses were the headwinds.
After considering certain non-recurring items, Lazard's
second-quarter 2013 net income came in at $31 million or 24 cents
Behind the Headlines
In the reported quarter, Lazard's operating revenues, on an
adjusted basis, came in at $511.4 million, up 24% from the prior
quarter. The rise was mainly attributable to increased financial
advisory revenues coupled with elevated asset management fees.
Moreover, total revenue outpaced the Zacks Consensus Estimate of
Operating expenses increased 18.4% sequentially to $411.8
million, attributable to higher compensation and benefits
expenses coupled with elevated non-compensation expenses.
The segment's total revenue stood at $263.3 million, up 56% from
$168.5 million recorded in the prior quarter. The upsurge was
primarily due to a rise in strategic advisory revenues, partially
offset by reduced restructuring revenues.
The segment's total revenue was $243.1 million, inching up 1.4%
from $239.7 million reported in the prior quarter. The rise was
mainly due to an increase in incentive fees, partially offset by
a fall in management fees and other revenues.
The segment generated total revenue of $5.0 million compared with
$5.5 million in the prior quarter.
Assets Under Management
AUM was recorded at $163.3 billion as of Jun 30, 2013, down 5%
sequentially. The sequential fall mainly reflects market
depreciation and net outflows. Average AUM as of Jun 30, 2013
came in at $168 billion, down 2% sequentially.
Lazard boasts a healthy and low-risk financial position with
roughly $601.5 million in cash and cash equivalents as of Jun 30,
2013 compared with $850.2 million as of Dec 31, 2012. Total
stockholders' equity was $592.2 million compared with $651.5
million as of Dec 31, 2012.
During second-quarter 2013, Lazard returned $54 million to
shareholders. This includes share repurchases of Class A common
stock worth $20 million, dividend payment worth $31 million along
with $3 million paid for meeting employee tax obligations in
exchange of share issuances upon vesting of equity grants.
Cost Saving Initiatives
In 2012, Lazard announced cost saving initiatives, which were
expected to record about $125 million in annual savings from its
existing cost base. The company has exceeded its target and now
anticipates total annual savings of about $160 million, partially
offset by investment in business. The firm expects more than
two-thirds of these savings to be recognized in 2013, and the
full impact in 2014 results.
Notably, in the quarter under review, related implementation
expenses came in at about $38 million, up from $26 million in the
prior-quarter. Total implementation expenses summed to about $167
The sluggish macroeconomic environment coupled with regulatory
issues and net outflows will likely put Lazard's profitability
under pressure in the near term. However, we believe that the
company's diverse footprint and cost-curtailment initiatives will
position it comfortably in the long run. Moreover, capital
deployment efforts would further enhance investors' confidence in
Shares of Lazard currently carry a Zacks Rank #3 (Hold). Among
other investment managers,
Franklin Resources Inc.
) is scheduled to report earnings for the June-end quarter on Jul
Waddell & Reed Financial, Inc.
) will report on Jul 30 and
) on Jul 31.
FRANKLIN RESOUR (BEN): Free Stock Analysis
INVESCO LTD (IVZ): Free Stock Analysis Report
LAZARD LTD (LAZ): Free Stock Analysis Report
WADDELL&REED -A (WDR): Free Stock Analysis
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