Lazard Ltd. (NYSE:LAZ) Q2 2020 Earnings Conference Call - Final Transcript

Jul 31, 2020 • 08:00 am ET

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Lazard Ltd. (NYSE:LAZ) Q2 2020 Earnings Conference Call - Final Transcript

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Presentation
Executive
Kenneth M. Jacobs

in global capital markets during the second quarter. Our assets under management increased 11% from the first quarter. While we experienced net outflows for the quarter, gross inflows were strong. Our quantitative strategies continued to gain traction, as did our convertible and international equity strategies.

We continue to invest in the growth of Asset Management through the development and scaling up of new and existing platforms. Recently, we announced the launch of U.S. and Global Sustainable Equity strategies, which are receiving strong demand.

Our sustainable equity strategies are built on the foundation of our long-standing efforts in ESG integration, where we have a unique sector-based approach to materiality assessment. We see significant opportunity for Lazard in this space and are committed to further deepening of our ESG research capabilities and investment solutions for clients.

Before I turn the call over to Evan, I want to comment on the evolution of Lazard's day-to-day operations during the pandemic.

At the time of our last earnings call, virtually all of our people were working from home in response to the global health crisis. Since then, many of our employees have returned to the office with guidelines to maintain social distancing. We have adapted quickly to a hybrid environment with a number of our people in the office and others in home. A silver lining to this experience has been the improvements in efficiencies, internal communications and other positive cultural changes that might otherwise have taken years to accomplish. As we move forward, we are taking steps to ensure that we lock in these improvements for the benefit of all our stakeholders.

Once again, I want to thank our people for their resiliency and commitment to upholding Lazard's standards of excellence even in the most challenging conditions.

Evan will now provide more color on our second quarter and first half results. Then I will comment on our outlook.

Executive
Evan L. Russo

Thank you, Ken. Our second quarter results reflect the breadth and diversity of our business in a challenging market environment.

Financial Advisory second quarter operating revenue of $293 million was down 11% from last year, but was about even with the first quarter of this year. As we expected, M&A revenue decreased compared to last year's second quarter. However, restructuring revenue increased sharply based on new activity and the closing of several large assignments.

Asset Management operating revenue of $245 million declined 9% from this year's first quarter, reflecting lower average assets under management in the second quarter following the broad market sell-off in the first quarter.

Average AUM for the second quarter was $208 billion, 6% lower than the first quarter of this year and 12% lower than a year ago. We finished the second quarter with AUM at $215 billion, 11% higher than the start of the quarter. The increase was primarily driven by market appreciation and positive foreign exchange movement, with $6 billion of net outflows. The quarter's net outflows were driven primarily by emerging markets and multiregional equities. These were partly offset