Lazard LTD.

Thank you for standing by for the Lizard earnings call. At this time, we are sending today's audience and plan to be underway shortly. Thank you for your patience and please continue to hold. Good morning and welcome to Lazard's first quarter 2022 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 Alexander Dagan, Lazard's Head of Investor Relations and Corporate Sustainability. Please go ahead.

Good morning, and welcome to Lazard's earnings call for the first quarter of 2022. 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 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 CARD 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, Lizard'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 the call to questions. I will now turn the call over to Evan.

Good morning. Today, we reported an 8% increase in operating revenue for the first quarter and strong performance by both our businesses. In financial advisory, first quarter revenue of $388 million increased 22% from last year's period, reflecting continued momentum, particularly across Europe and North America. Despite heightened geopolitical risks and concerns about inflation and supply chain challenges, our engagement with clients has remained robust and activity remains at historically high levels. Regarding restructuring, we are seeing a continuation of lower levels of deal activity, but we are experiencing an increased level of dialogue with clients. In asset management, operating revenue of $312 million decreased 5% from last year's period, reflecting lower average AUM for the quarter. As of March 31st, we reported AUM at $253 billion, 5 percent lower than last year's period, and 8 percent lower on a sequential basis from December 31st. The decrease was primarily driven by market depreciation of $12.4 billion, net outflows for the quarter of $6.5 billion, and foreign currency depreciation of $2.1 billion. Average AUM for the first quarter was $256 billion, 2 percent lower than a year ago, and 6 percent lower on a sequential basis. Since the start of the year, a number of drivers have been impacting market valuations of several asset classes, with a consequent impact on our AUM. These drivers have included Russia's invasion of Ukraine, surging inflation globally, and rising interest rates. Incentive fees were $25 million, representing the second highest incentive revenue we have reported in a first quarter, driven by the strong performance of our funds, including European equities, and fixed income, as well as Japanese equities. Gross flows showed strong demand, including in global and multi-regional equities. We had net inflows in a number of strategies, led by emerging markets debt and alternatives. Additionally, we continue to see strong demand from our increased focus on distribution in Europe. As of April 22nd, our AUM was $243 billion, driven by market depreciation of $5.4 billion, foreign exchange depreciation of $3.6 billion, and net outflows of approximately $240 million. We continue to invest for growth across the firm. In financial advisory, we are continuing to increase our team of senior talent through internal promotes as well as strategic recruiting. In asset management, we are growing the business through our investment in people, technology, and distribution. This includes focus on strategic investments in recruiting and building out of new teams and strategies such as sustainable private infrastructure and climate action. Now turning to expenses. In the first quarter, we accrued compensation expense at a 58.5% adjusted compensation ratio, consistent with our full year of 2021 ratio and compared to 59.5% in the first quarter of last year. Our adjusted non-compensation ratio for the first quarter was 16.8% compared to 15.8% in the first quarter of last year, primarily reflecting higher travel and business development expenses as COVID-related restrictions began to relax in many parts of the world, as well as the continued investments in technology. Regarding taxes, our effective tax rate for the first quarter as adjusted was 25.4%, which compares to 28.6% effective tax rate in last year's first quarter. We currently expect this year's annual effective tax rate to be in the mid 20% range. We continue to generate strong cash flow, which supports return of capital to shareholders. In the first quarter, we returned $281 million, including $47 million in dividends and $176 million in share repurchases. During the first quarter, we bought back 4.7 million shares of our common stock at an average price of $37.26. These repurchases more than offset potential dilution from our 2021 year-end equity compensation. Our weighted average share count at quarter end was 109 million shares, reflecting a decrease of 6% from the prior year quarter. Going forward, we expect to continue to use excess cash flow toward share repurchases. In addition, yesterday we declared a quarterly dividend on our common stock of 47 cents per share. Despite the significant market volatility and uncertainty which impacted global markets in the first quarter, the resiliency of our quarterly results underscores the strength and stability of our model and the continued high performance of our businesses. Ken will now share his perspective on our performance and outlook.