Lazard LTD.

Good morning and welcome to Lazard's second quarter and first half 2021 earnings conference call. This call is being recorded. Currently, all participants are in listen-only mode. Following the remarks, we will conduct a question and answer session. Instructions will be provided at that time. If anyone should require assistance during the call, please press the star key followed by the zero on your touchtone phone. At this time, I would like to turn the call over to Alexandra Degnan, Lazard's Head of Investor Relations. Please go ahead.

Good morning, and thank you for joining us today on Lazard's earnings call for the second quarter and first half of 2021. I'm Alexandra Degnan, the company's Head of Investor Relations and Corporate Sustainability. In addition to today's audio comments, we've posted our earnings release and an investor presentation, which you can access on our website. A replay of this call will also be available on our website later today. Before we begin, let me remind you that we may make forward-looking statements about our business and performance. There are important factors that could cause our actual results, level of activity, performance, or achievements to differ materially from those expressed or implied by the forward-looking statements, including but not limited to those factors discussed in the company's SEC filings, which you can access on our website. Lazard assumes no responsibility for the accuracy or completeness of these forward-looking statements and assumes no duty to update these forward-looking statements. Today's discussion also includes certain non-GAAP financial measures that we believe are meaningful when evaluating the company's performance. A reconciliation of these non-GAAP financial measures to the comparable GAAP measures is provided in our earnings release and investor presentation. Hosting our call today are Kenneth Jacobs, Lazard's Chairman and Chief Executive Officer, and Evan Russo, Chief Financial Officer. Evan will start the discussion with an overview of our financial results. Then Ken will provide his perspective on the outlook for our business. After that, we will open up the call to questions. I'll now turn the call over to Evan.

Good morning. Today we reported record operating revenue for the second quarter and first half of 2021, driven by strong results across the firm. Second quarter revenue was a record $821 million, up 51% from a year ago, and first half revenue was a record $1.5 billion, up 33% from a year ago. Revenue for the last 12 months was a record $2.9 billion. This high performance underscores the strength of our franchise and the breadth and depth of our business. In financial advisory, record second quarter revenue of $471 million increased 61% from last year's period, reflecting broad-based activity, across sectors, market cap, and regions. M&A completions in the second quarter increased substantially in the Americas, Europe, and Asia, as did private equity transactions. Our advisory revenue reflects a growing percentage of financial sponsor activity. Our global private capital advisory franchise also had a strong quarter, serving financial sponsors with new fundraising and innovative secondary market solutions. Our second quarter restructuring revenue was down from last year's elevated level, and we expect lower levels of restructuring to continue in the second half of the year, given the strong liquidity across markets. Our sovereign and capital markets businesses continue to be active, advising governments and corporations on financing strategy and capital raising. Overall, our advisory business is experiencing unprecedented activity levels. Assuming current macroeconomic conditions, As we said last quarter, we expect that our financial advisory revenue in the second half of 2021 will be higher than the first half. Asset management operating revenue reached an all-time high for the quarter and first half of the year, with second quarter revenue of $343 million, up 40% from a year ago. This reflected management fees on a larger base of assets under management as well as strong incentive fees, primarily from European equity strategies. Average AUM for the second quarter reached a record high of $276 billion, 32% higher than a year ago and 6% higher on a sequential basis. As of June 30th, we reported AUM at a quarter-end record level of $277 billion, 29% higher than last year's period, and 5% higher on a sequential basis. The increase was primarily driven by market appreciation and positive foreign exchange movement with $0.8 billion of net outflows. The quarter's net outflows were limited to our equity platform, particularly in emerging markets. These were partly offset by net inflows in our fixed income and alternatives platforms. Gross inflows continued to be healthy across our platforms. As of July 23rd, AUM increased to approximately $278 billion, driven primarily by market appreciation of $2.5 billion, partly offset by negative foreign exchange movement of $1.3 billion, and net outflows of approximately $1 billion. We continue to see demand for global and international equities, as well as our quantitative and fixed income strategies. We are investing for growth across the firm. In asset management, we continue to invest in people, technology, and our distribution effort, as well as the development of new and existing funds and the scaling up of our platforms. In the second quarter, we launched an investment-grade convertible bond fund, our fifth long-only strategy in the convertible space, an area where we are gaining significant traction. In addition, this week we announced the senior hire to build and launch an investment strategy focused on sustainable private infrastructure. We continue to see substantial opportunities to recruit talented investment teams, adding strategies that are complementary to our existing platforms. In financial advisory, we are driving growth with an elevated pace of strategic recruiting. Year to date, we have made more than a dozen senior hires, including several high-level senior advisors to increase the firm's breadth of revenue sources and connectivity. Now turning to expenses. Even as we invest for growth, we are maintaining our cost discipline. Our adjusted non-compensation ratio for the second quarter was 14.5% compared to 18.3% in last year's second quarter. Non-compensation expenses were 19% higher than the same period last year, reflecting increased business activity over last year's depressed levels. We continue to accrue compensation expense at a 59.5% adjusted compensation ratio in the second quarter. Regarding taxes, our adjusted effective tax rate in the second quarter was 25.2%. For the first half of the year, it was 26.7%. We continue to expect this year's annual effective tax rate to be in the mid-20% range. Lazard continues to generate strong cash flow, which supports return of capital to shareholders. In the second quarter, we returned $161 million, which included $111 million in share repurchases. We expect to continue our share repurchase program, utilizing our cash flow from operations. Our total outstanding share repurchase authorization is now approximately $339 million. Ken will now provide perspective on our outlook.