Lazard Inc Q1 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Michael Brown - Wells Fargo - Analyst : Great. Good morning and thanks for taking my questions. So Peter, positive commentary on the backlog. That's great to hear. It sounds like it's growing in broad-based. Maybe just within the backlog. Are you seeing a higher level than normal of M&A deals dropping out? So despite seeing the growth underneath the surface, is there some M&A deals that are actually dropping? And then do you see risk of that picking up at all? Thank you.

Question: Michael Brown - Wells Fargo - Analyst : Great. Great. Well said. Maybe if I just -- as a follow-up, just kind of narrowing on 2Q here. It's off to a good start based on what we can see in the public data and the deals that are set to close in the quarter would actually point to a pretty good second quarter here. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 25, 2025 / 12:00PM, LAZ.N - Q1 2025 Lazard Inc Earnings Call Based on the visibility you have, how do you think the second quarter can compare to this first quarter? Can it be up sequentially? And could it

Question: Michael Brown - Wells Fargo - Analyst : Understood. Thank you for taking my questions.

Question: James Yaro - Goldman Sachs - Analyst : Good morning and thanks for taking my questions. Just firstly, on the sponsor M&A dynamic. I think 2025 was supposed to be a much healthier sponsor capital return backdrop across both M&A and IPOs. To what extent are you seeing sponsor M&A slowdown as a result of the macro backdrop in tariffs? And then what does this mean for the growth of secondaries for this year?

Question: James Yaro - Goldman Sachs - Analyst : Okay. That's very clear. Maybe just -- could you speak a little bit to the dynamics within restructuring? Could you talk about how trends have evolved in terms of separately liability management versus Chapter 11 in bankruptcy and then the outlook for both of these components? And then finally, maybe just how quickly could Chapter 11 potentially pick up if we were to see a weaker macro backdrop?

Question: James Yaro - Goldman Sachs - Analyst : That's very clear, thanks a lot.

Question: Benjamin Rubin - UBS - Analyst : Hi, good morning. Thank you for taking my questions. I first wanted to start on the comp ratio. So 65.5%, slightly below the last year's accrual. And I know your goal is to get to 60% or below, and maybe the hope was to maybe get there this year. So I'm just curious, what would you need to see in terms of the M&A environment, the deal backdrop such that you'd be more comfortable bringing down the accrual rate? And then also, if you can give us any type of indication on whether or not the 65.5% assumes improvement in the fee revenues throughout the year? And if so, what type of magnitude?

Question: Benjamin Rubin - UBS - Analyst : Great, thank you. I wanted to shift gears maybe to Asset Management. Peter, you mentioned previously that you're entering the year with -- 2025 could be an inflection for your Asset Management business, much like 2024 was for Financial Advisory with maybe the potential of hitting your net zero flows. And you've been active, obviously, as you mentioned in your prepared remarks about launching active ETFs in the US also the general shift of investor interest going beyond the US should benefit your global strategies. So just curious, how do you feel about that net flow target today? And then also maybe, if you could provide us a mark-to-market on how the flow picture is looking for April, that would be great. Thank you.

Question: Benjamin Rubin - UBS - Analyst : Great. Thank you for taking my questions.

Question: Ryan Kenny - Morgan Stanley - Analyst : Hi, good morning. Thanks for taking my questions. So follow-up on the comp ratio. I understand there's a lot of uncertainty on the revenue side. But is there any framework we should think about in terms of comp dollar range? Is there a floor on comp dollars that we should think about in the scenario where maybe more deals start getting pushed out?

Question: Ryan Kenny - Morgan Stanley - Analyst : Right. That's helpful. And then on the restructuring backlog growing. Any sense on how quickly conversations can turn into mandates and then how quickly that can hit the P&L? Is that more of a 2025 pickup story or more of a 2026 story?

Question: Ryan Kenny - Morgan Stanley - Analyst : Thank you.

Question: Alex Jenkins - Citizens JMP Securities - Analyst : This is Alex Jenkins filling in for Devin. I guess just a follow up on the asset management side, that $10 billion Asset Management mandate that you highlighted last quarter. Can you speak to whether any of that's been funded to date and just the timeline for full deployment? And specifically, are there any challenges or opportunities in executing this mandate that you would like to highlight today? Thank you.

Question: Alex Jenkins - Citizens JMP Securities - Analyst : Okay. Yes. I appreciate it. I guess just a quick follow-up on capital and growth. You've continued to bolster the platform. You announced your expansion plans in Europe. I guess, just how are you prioritizing capital allocation between organic growth, strategic partnerships and just shareholder returns? And maybe can you speak to anything in terms of investments or acquisitions in the pipeline to support the 2030 strategic plan? Thank you.

Question: Alex Jenkins - Citizens JMP Securities - Analyst : Okay, thank you very much.

Question: Brandon O'Brien - Wolfe Research - Analyst : Good morning and thanks for taking my questions. I guess to start, I just wanted to touch on Europe. I've been -- we've been hearing a lot more positivity on the M&A backdrop in the region relative to the US of late. So I just wanted to get a sense as to how conversations in Europe compare to those in the US? And also, Peter, you were quite -- you were constructive on that cross-border activity potentially improving if we were to see a more protectionist regime in the US, but we've also seen some governments be fairly aggressive in discouraging US investment in response to more significant tariffs that were implemented. So I just wanted to get a sense as to how your outlook there has changed at all as well. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 25, 2025 / 12:00PM, LAZ.N - Q1 2025 Lazard Inc Earnings Call

Question: Brandon O'Brien - Wolfe Research - Analyst : That's helpful color. And I guess for my follow-up, you alluded to this a bit in answer to a prior question, but I was just hoping you can give a bit more color on what you're seeing in terms of credit availability at the moment. And specifically, whether you believe that growth in private credit will result in financing being more readily available in a down cycle relative to what we've seen in the past.

Question: Brandon O'Brien - Wolfe Research - Analyst : Great. Thank you for taking my questions. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 25, 2025 / 12:00PM, LAZ.N - Q1 2025 Lazard Inc Earnings Call

Question: Michael Brown - Wells Fargo - Analyst : Great, thanks for taking my follow up. I just wanted to ask on the fee rate. It picked up nicely here in the first quarter. And just in light of that, how should we think about the full year fee rate guide? Is the 1Q the right level to consider for the next couple of quarters? Like is that the right jumping off point? Or does the mix shift from the mandates that are set to fund actually start to bring the fee rate down as those flow in?

Question: Michael Brown - Wells Fargo - Analyst : Okay, great. Thanks Evan.