) third-quarter 2013 adjusted earnings came in at 46 cents per
share, easily beating the Zacks Consensus Estimate of 35 cents.
Moreover, this compares favorably with 26 cents earned in the
Better-than-expected results were driven by strong top-line
performance, primarily aided by increase in financial advisory as
well as asset management revenues. Moreover, the company's strong
capital position and higher assets under management (AUM) were
the positives. However, higher expenses were a dampener.
After considering certain non-recurring items, Lazard's
third-quarter 2013 net income came in at $60.3 million or 45
cents per share. This was considerably higher than the prior-year
quarter net income of $33.3 million or 26 cents.
Behind the Headlines
In the reported quarter, Lazard's operating revenues, on an
adjusted basis, came in at $488.7 million, up 10% from the
prior-year quarter. The rise was mainly attributable to increase
in financial advisory revenues and asset management fees.
Moreover, total revenue outpaced the Zacks Consensus Estimate of
Operating expenses increased 4.3% year over year to $389.2
million due to higher compensation and benefits expenses, along
with higher non-compensation expenses.
: The segment's total revenue was $233.8 million, up 6% from the
prior-year quarter. The rise was primarily due to increase in
both strategic advisory revenues and restructuring revenues.
: The segment's total revenue was $248.1 million, up 13% from the
prior-year quarter. The rise was mainly due to increase in
management fees and other revenues, partially offset by a fall in
: The segment generated total revenue of $6.8 million compared
with $2.9 million in the prior-year quarter.
Assets Under Management
AUM was recorded at $176.5 billion as of Sep 30, 2013, up 10.0%
year over year. The rise came on the back of higher market
appreciation and rise in net inflows. Average AUM as of Sep 30,
2013, came in at $171.5 billion, up 9.5% year over year.
Lazard boasts a healthy and low-risk financial position with
roughly $688.4 million in cash and cash equivalents as of Sep 30,
2013, compared with $850.2 million as of Dec 31, 2012. Total
stockholders' equity was $657.1 million compared with $651.5
million as of Dec 31, 2012.
In the reported quarter, Lazard returned $64 million to
shareholders. This included share repurchase of Class A common
stock worth $27 million, dividend payment worth $31 million,
along with $6 million paid for meeting employee tax obligations
in exchange of share issuances upon vesting of equity grants.
As of Sep 30, 2013, Lazard repurchased 3.2 million shares at an
average price of $33.72 per share during the first nine months of
the year. At the quarter-end, the company had a remaining share
repurchase authorization worth $76 million. Additionally, on Oct
23, 2013, the board of directors authorized an additional share
repurchase of up to $100 million, which will expire on Dec 31,
Cost Saving Initiatives
In 2012, Lazard announced cost saving initiatives, which were
expected to generate annual savings of around $160 million,
partially offset by certain business investments.
Approximately $120 million of the expected total savings are
related to reduction of the employees' compensation expense,
while the remaining $40 million are from the reduction of
non-compensation expense. The company expects more than
two-thirds of these cost savings to be realized in 2013 and the
full impact of all the savings to be reflected in full-year 2014
Among other asset managers,
The Blackstone Group L.P.
) third-quarter 2013 economic net income (ENI) came in at 56
cents per share, missing the Zacks Consensus Estimate by a penny.
However, this compares favorably with ENI of 55 cents recorded in
the year-ago period.
Lower-than-expected results were due to a fall in top line,
partially offset by lower expenses. However, strong growth in
assets under management (AUM) and an improved balance sheet were
the tailwinds for the quarter.
BLACKSTONE GRP (BX): Free Stock Analysis
INVESCO LTD (IVZ): Free Stock Analysis Report
LAZARD LTD (LAZ): Free Stock Analysis Report
LEGG MASON INC (LM): Free Stock Analysis
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The sluggish macroeconomic environment, stringent regulations 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 containment initiatives position it
favorably in the long run. Moreover, Lazard's capital deployment
efforts are expected to further enhance investors' confidence in
Lazard currently carries a Zacks Rank #3 (Hold). Among other
Legg Mason Inc.
) are scheduled to report results for the quarter ended September
on Oct 25 and Oct 31, respectively.