) fourth-quarter 2013 adjusted earnings came in at 81 cents per
share, easily beating the Zacks Consensus Estimate of 60 cents.
Moreover, this compares favorably with 61 cents earned in the
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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, elevated compensation and benefits
expenses were a dampener.
After considering certain non-recurring items, Lazard's
fourth-quarter 2013 net income came in at $53 million or 40 cents
per share. This compared favorably with the prior-year quarter
net loss of $5 million or 5 cents per share.
For full-year 2013, adjusted earnings were $2.01 per share,
outpacing the Zacks Consensus Estimate by 21 cents. Moreover, it
was above the prior-year earnings of $1.44 per share.
After considering certain non-recurring items, net income came in
at $160 million or $1.21 per share compared with the prior-year
net income of $84 million or 65 cents per share.
Performance in Detail
For full-year 2013, Lazard's operating revenues, on an adjusted
basis, came in at $2.0 billion, up 3% from the prior year.
Results were in line with the Zacks Consensus Estimate.
In the final quarter, adjusted operating revenues came in at $620
million, up 8% year over year. The rise was mainly attributable
to increase in financial advisory revenues and asset management
fees. Moreover, revenues surpassed the Zacks Consensus Estimate
of $561 million.
Operating expenses remained almost in line with the prior-year
quarter at $457 million, as higher compensation and benefits
expenses were offset by lower non-compensation expenses.
Adjusted non-compensation expense for the final quarter was $109
million, down 5% year over year. The ratio of non-compensation
expense to operating revenues was 17.5% compared with 20.0% in
the prior-year quarter.
For 2014, the company targets a non-compensation
expense-to-revenues ratio between 16% and 20%, while adjusted
compensation ratio to be in the mid-to high-50s percentage range.
The segment's total revenue was $315 million, up 2% from the
prior-year quarter. The rise was primarily due to increase in
M&A and other advisory revenues, partially offset by
decreased restructuring operating revenues.
The segment's total revenue was $293 million, up 20% from the
prior-year quarter. The rise was driven by increase in management
fees, other revenues and incentive fees.
The segment generated total revenue of $12.3 million, down 36%
year over year.
Assets Under Management
AUM was recorded at $187 billion as of Dec 31, 2013, up 12% year
over year. The company recorded net outflows of $1.9 billion and
market appreciation of $21.8 billion. Average AUM as of Dec 31,
2013, came in at $174 billion, up 12% year over year.
Lazard boasts a healthy and low-risk financial position with
roughly $841 million in cash and cash equivalents as of Dec 31,
2013, compared with $850 million as of Dec 31, 2012. Total
stockholders' equity was $630 million compared with $652 million
as of Dec 31, 2012.
In 2013, Lazard returned $416 million to shareholders. This
included share repurchase of Class A common stock worth $161
million, dividend payment worth $123 million, along with $132
million paid for meeting employee tax obligations in exchange of
share issuances upon vesting of equity grants.
During fourth-quarter 2013, Lazard repurchased 1.3 million shares
at an average price of $42.40 for a total cost of $55 million. At
year end, the company had a remaining share repurchase
authorization worth $122 million.
Recently, the board of Lazard approved a 20% increase in its
quarterly cash dividend. The company will now pay a quarterly
dividend of 30 cents per share against 25 cents a share
distributed previously. The increased quarterly dividend will be
paid on Feb 21, 2014 to shareholders of record as on Feb 10.
Among other asset managers,
Franklin Resources Inc.
Janus Capital Group Inc.
Legg Mason Inc.
) December quarter results outpaced the Zacks Consensus Estimate.
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
Shares of Lazard currently carry a Zacks Rank #1 (Strong