Lazard LTD.

Good morning and welcome to Lazard's full year and fourth quarter 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 you 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 conference over to Alexandra Degnan, Lazard's Head of Investor Relations and Corporate Sustainability. Please go ahead.

Good morning, and welcome to Lazard's earnings call for the full year and fourth quarter of 2021. I'm Alexandra Degnan, the company's head of investor relations and corporate sustainability. In addition to today's audio comments, we have 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. The SART assumes no responsibility for the accuracy or completion of the SART, and has 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. The reconciliation of these non-GAAP financial measures to the comparable GAAP measures is provided in our earnings release and investor presentation. Our call today are Kenneth Jacobs, Lazard's chairman and chief executive officer, and Evan Russo, chief financial officer. Evan will start with the discussion of an overview of our financial results, and then Ken will provide his perspective on the outlook for our business. After that, we will open the call to questions. Now I'll turn the call over to Evan.

Good morning. Today we reported record results for the fourth quarter and full year of 2021, an achievement reflecting strong performance across our businesses. Full year operating revenue was a record $3.1 billion, up 24% year over year. This included record quarterly revenue in the fourth quarter of $968 million, up 14% from the prior year. We generated record earnings reflecting the operating leverage in our business model. For the year, adjusted net income increased 40% to $5.04 per share. In the fourth quarter, adjusted net income increased 16% year-over-year to $1.92 per share. These results underscore the strength and range of the Lazard franchise. Our global platform incorporates diverse revenue streams of significant scale, innovative client solutions, and growth opportunities in which we continue to invest. In financial advisory, record annual revenue of $1.8 billion was 27 percent higher than the prior year. This included a record fourth quarter of $608 million, which was 20 percent higher than the prior fourth quarter. Our advisory results reflected strong M&A completions in the Americas and in Europe, as well as increased private market and capital raising assignments. Our revenue from transactions involving financial sponsors nearly doubled in 2021 as we continued to enhance our coverage of the private equity marketplace. Our private capital advisory business had its strongest year ever, advising financial sponsors globally on fundraising and on innovative secondary market solutions. Our capital markets advisory business remained highly active, advising clients on financing, capital structure, and stakeholder strategy. And our restructuring and sovereign advisory franchises continue to advise corporations and governments on select assignments around the world. Entering 2022, our financial advisory business continues with strong momentum, and activity levels remain elevated across the globe. Our asset management business also generated record operating revenue for the fourth quarter and full year of 2021. Annual revenue of $1.3 billion increased 20% over the prior year. Management fees for 2021 increased 15% over the prior year, and incentive fees more than doubled, reaching a record $120 million. Incentive fees were driven by strong performance in a number of our small-cap equities, fixed income, and alternative strategies. Average assets under management in the fourth quarter achieved a record high of $274 billion, 11% higher than a year ago. Our AUM ended the year at $274 billion, up 6% on an annual basis and marginally higher on a sequential basis from the third quarter. The sequential change was driven by market appreciation of $9.9 billion partially offset by foreign exchange depreciation of $2.0 billion and net outflows of $6.7 billion. The quarter's net outflows were primarily from our equities platform, partly offset by net inflows in alternatives and global fixed income strategies. Gross inflows in the quarter continued to reflect demand across our platforms. Over the course of 2021, we had approximately $1 billion of net inflows into newer strategies, such as our digital health and our global convertible investment-grade portfolios. On a macro level, we saw some de-risking at year-end as investors rebalanced their strategic asset allocations amid rising inflation and the potential for higher interest rates. On a preliminary basis, as of January 31st, AUM decreased to approximately $259 billion. driven primarily by market depreciation of $9.2 billion, foreign exchange depreciation of $1.4 billion, and net outflows of $4 billion. The year is off to a volatile start in the equity markets, with major indices down 5% to 10% across the board. While volatility may remain elevated, we are encouraged by early signs of market rotation from speculative growth to quality and value. a shift that would favor our style of fundamental research-driven active management. This trend has already had a positive impact on performance across a number of our strategies. Following our strong results in 2021, we continue to invest for growth across our businesses. In financial advisory, we have increased our pace of external hiring with more than 20 new managing directors and senior advisors joining us in 2021. In November, we also formed a strategic alliance with Independence Point Advisors, a new women-owned investment bank with an impressive team of seasoned professionals. We expect our partnership with IPA to be a strong complement to our advisory business. This month, Financial Advisory expects to name 21 new managing directors in its annual promotion process. More than half began their careers here as interns, analysts, or associates. Our ability to develop talent organically remains a powerful competitive strength. In asset management, we continue to build the business through investment in people, technology, and distribution, as well as the development of new products and the scaling up of existing platforms. In 2021, we introduced five new strategies for clients across our traditional and alternative platforms. including funds focused on sustainability, energy transition, and inflation protection. Asset management expects to name nine new managing directors in its annual promotion process and has been bolstering resources on its investment teams, sustainability research, and global marketing and distribution network. We continue to see substantial opportunities to recruit talented investment teams adding strategies that are complementary to our existing platforms. We are also enhancing our thought leadership in areas where we can provide data-driven insights for our clients. In November, we launched the Lazard Climate Center, which we expect will add value to both our advisory and asset management businesses. Turning to expenses, our compensation ratio for 2021 on an adjusted basis was 58.5 percent compared to 59.5 percent in 2020. On an awarded basis, the ratio was 58.8 percent compared to 59.8 percent in 2020. Adjusted non-compensation expense for the year rose 9 percent, which reflected a partial return to normalized level of travel and business development costs and investments in technology and recruiting across our businesses. For the full year 2021, our non-compensation ratio was 15%. Our effective tax rate for 2021 was 23.9% compared to 20.2% a year ago. For 2022, we expect an annual effective tax rate in the mid-20% range. Regarding capital allocation, our business continues to generate significant free cash flow. which supports our goal of returning excess capital to our shareholders. We have been consistent in returning capital through our quarterly common dividend, and yesterday we declared our quarterly dividend of 47 cents per share. We continued our share repurchase program in 2021, more than offsetting dilution from year-end equity grants. We repurchased a total of 9.1 million shares during the year, which included 2.7 million shares in the fourth quarter. As a result, our fourth quarter diluted weighted average share count declined by 2.5 million shares from the prior year to 113.3 million shares. We expect to continue our share repurchase program utilizing our cash flow from operations. Yesterday, our Board of Directors authorized additional share repurchases of up to $300 million, bringing our total outstanding share repurchase authorization to $431 million. Lazard's financial position remains strong, with ample liquidity and balance sheet flexibility. As of December 31st, our cash and cash equivalents were approximately $1.5 billion. Ken will now provide perspective on our outlook.