Yahoo Finance Lazard (LAZ) Q4 Earnings Miss Estimates, Revenues Fall Y/Y
Lazard Ltd.’s LAZ fourth-quarter 2022 adjusted net income of 69 cents per share missed the Zacks Consensus Estimate of 72 cents. The reported figure reflects a decline of 64% on a year-over-year basis.
Results were hurt by a decline in revenues. A decrease in assets under management (AUM) balance on net outflows was another headwind. However, the company’s balance sheet position remained robust. Lower expenses aided the results to some extent.
On a GAAP basis, Lazard’s net income was $42 million, down 80% from the prior-year quarter.
Adjusted net income of $3.73 per share for 2022 missed the Zacks Consensus Estimate of $3.75. The reported figure reflects a decline of 26% on a year-over-year basis. GAAP net income was $358 million, down 32% from the prior-year period.
Revenues & Expenses Decline
Quarterly adjusted operating revenues totaled $671 million, down 31% year over year. The top line beat the Zacks Consensus Estimate of $664.8 million.
Adjusted operating revenues for 2022 totaled $2.77 billion, down 12% year over year. The top line marginally beat the Zacks Consensus Estimate of $2.76 billion.
Operating expenses were $639.2 million, down 12% year over year. The decline was mainly due to a fall in compensation and benefits costs, occupancy and equipment costs, professional services costs, and fund administration and outsourced services costs.
The ratio of adjusted compensation expenses to operating revenues was 62.4%, up from the year-earlier quarter’s 56.3%. The ratio of non-compensation expenses to operating revenues was 21.1%, up from the year-ago quarter’s 13.8%.
Quarterly Segmental Performance Weak
Financial Advisory: The segment’s adjusted operating revenues were $403.8 million, down 34% from the year-earlier quarter.
Asset Management: The segment’s adjusted operating revenues were $258.6 million, down 25% from the prior-year quarter.
Corporate: The segment’s adjusted operating revenues were $8.5 million, down 35% year over year.
AUM Declines
As of Dec 31, 2022, total AUM was $216.1 billion, down 21% from the prior-year quarter. The quarter witnessed a market and foreign-exchange appreciation of $22.1 billion and net outflows of $3.7 billion.
The average AUM in the reported quarter was $211.2 billion, down 23% year over year.
Balance Sheet Position Solid
Lazard’s cash and cash equivalents totaled $1.23 billion as of Dec 31, 2022, compared with $1.47 billion as of Dec 31, 2021. The company’s stockholders’ equity was $675.4 million compared with $1.08 billion as of Dec 31, 2021.
Capital Deployment Update
In 2022, Lazard repurchased 19.7 million shares.
As of Dec 31, 2022, the company’s remaining share repurchase authorization was $302 million.
Our Viewpoint
Lazard’s has a diversified business model, and it aligns comfortably with the current economic environment. Also, the capital deployment activities seem sustainable. However, the fall in AUM was an undermining factor.
Currently, Lazard carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Asset Managers
BlackRock, Inc.’s BLK fourth-quarter 2022 adjusted earnings of $8.93 per share surpassed the Zacks Consensus Estimate of $7.99. The figure reflects a decrease of 16.4% from the year-ago quarter.
The quarterly results benefited from a decline in expenses. However, lower revenues and AUM balance were the major headwinds for BLK.
Invesco’s IVZ fourth-quarter 2022 adjusted earnings of 39 cents per share surpassed the Zacks Consensus Estimate of 36 cents. The bottom line, however, plunged 54.7% from the prior-year quarter. Our estimate for earnings was 33 cents.
IVZ’s results benefited from a decline in operating expenses. Then again, lower AUM balance and long-term outflows hurt revenues.
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