Q4 2019 Earnings Call
[noise] good morning, and welcome to Lazards, earning reports meeting.
This call is being recorded.
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At this time I will turn the call call over to Alexandra Deignan. Please go ahead.
Thank you you guys. Good morning, welcome to start earning calls all your one or 2019.
Dan Bergman companies had an investor relation in addition, and colleagues we posted our earnings release, an investor presentation, which you can assets on our website.
Oh, I'm, sorry, dotcom a replay of this call will also be available on our website later today.
Well we began.
Thank you that we may make forward looking statements about our business performance.
I'm not that could cause actual results level of activity Kwan sports achievements to differ materially from those expressed or implied by the forward looking statements, including but not limited to those boxes, it's gotten a company.
Only once you can access on our website Lazard assumes no responsibility for the occupancy or complete none of these forward looking statements I don't think no duty to update these forward looking thing.
Today's discussion also includes certain non-GAAP financial measures that we believe a meaningful when evaluating the company's performance a reconciliation of these non-GAAP financial measures to comparable GAAP measures you provided in our earnings release I think that's funny vision.
Oh during our call today, I'm kind of Jacob arch bogs, Chairman and Chief Executive Officer, and every CIO Chief Financial Officer.
<unk> opening remarks, and then we'll open the call. The question I'll now turn the call Okay.
Thank you always good morning today, we reported record fourth quarter operating revenue, reflecting told the tenants across our businesses.
Was driven by increased M&A revenue and higher management since I've been speech and asset management.
And our 2020 it was strong position with a global platform that incorporates the group's revenue streams have significant scale innovative client solutions and growth opportunities in which we continue to invest.
In financial Advisory danger operating revenue reflects increasing momentum in the second half or volume of announced European M&A transactions has risen sharply in the last six months or M&A activity has been especially strong in the billions of $10 billion range in 29 team or number of announced transactions increased by 10% over the prior.
You are even as the market decreased.
Continued to be a leader in one of the restructuring and get advisory assignments with significant pockets of opportunity.
We've been especially active in the retail and energy sectors.
All of our financial advisory practices remained active in 20, Nike our investments in shareholder advisory and data analytics are having a significant impact in our business by helping us identify opportunities faster.
Provide innovative decides for clients are sovereign capital and timing capital advisory businesses continue to advise government corporations and partnerships on financing strategy and capital raising them around the world. We continue to keep those opportunities across our advisory businesses and had been a why do you know professional based accordingly in 29, teaming <unk> leadership transitions into.
[laughter] pageant financial advisory and M&A as well as new country has in France UK in Brazil. We also recruited a new venture into banking team based in London or asset management business had a strong fourth quarter and its higher management incentive fees, reflecting a you wouldn't growth and the performance of our strategies.
She modestly I didnt close during the quarter.
Assets under management increased by 17 billion or 7% during the quarter. We entered 2021 day you end up 20 248 billion up 15% from the start of 29 feet overall, our investment performance was strong across most of our platforms in 2019.
Our investments in new strategies and product extensions continue to provide new avenues of growth.
Quantitative visits achieved net inflows for both the fourth quarter and full year and get our local equity and their global and regional fixed income platforms.
We continue to invest in growth asset management through investments in people technology and distribution as well as the development of new farms and scaling up of existing platforms. In 2019, we reinforced our history expertise with the hiring of a new global co heads in New York in London.
We expanded our quantitative investment platform with the addition of two investment teams in San Francisco.
Continue to add to our European and Asian distribution and are gaining new clients across regions and we launched in times in international and global equities as well its fixed income.
Ill now provide corner results and I will comment at all right.
Thank you can look on full year operating revenue for 29 team was $2.55 billion, 8% lower than the record level achieved in 2018, that's reflected higher revenue in the second half of the year versus the first half as we anticipated.
A record fourth quarter revenue of $708 billion was 3% higher than the prior years period.
But actual advisory we completed the year was $1.36 billion in revenue.
Fourth quarter, our advisory revenue was in line with the prior year quarter, reflecting a substantial increase in revenue from Europe and Asia Pacific.
After management, we generated $1.16 billion in revenue when a year.
The fourth quarter operating revenue increased by 7% over the prior years quarter, reflecting higher management fees and incentive fees.
Fourth quarter management, and other fees increased 2% sequentially in the third quarter, reflecting higher average me.
For full year 2019, our average fee was 49 basis points down from 51 basis points can 20 team.
Like that a shift in our mix of assets, we had net inflows for the year quantitative and fixed income strategies, while at the same time, we experienced net outflows in our emerging markets platform.
[noise] incentive fees for the year were $21 billion. The same amount doesn't 2018 fourth quarter incentive fees were $14 million, reflecting strong relative and absolute performance across the mix of our equity and fixed income strategies.
Key strategies generating incentive fees included quantitative and global equities and convertibles kind of merchant markets debt.
I would tell you when for the fourth quarter was $238 billion up 6% from last years period up 2% sequentially from the third quarter of 29.
The sequential increase was driven by market appreciation $13 billion foreign exchange appreciation of $4 billion net inflows of approximately $500 million.
For the full year, we experienced net outflows $9 billion, driven primarily by outflows in emerging markets equity and debt as well multi regional equity.
Other platforms, such strong net inflows going here, including quantitative and local equities and our global multi regional fixed income platforms.
We finished 2019 $81 billion to $248 billion and after January 28, anyone with approximately $247 billion decrease reflected foreign exchange depreciation at $2.4 billion net outflows of $1.1 billion Fox backed by market appreciation of $2.3 billion.
Market volatility has been increasing in January and we anticipate additional near term outflows of approximately $500 million for the month.
Looking ahead across our franchise.
Management is off to a good start with AOL well above its average level for 2019.
[noise] financial advisory, we have momentum and during the first half the year. Our current level of activity is higher than at this time last year and we are encouraged by the increase in the European M&A, where we have a deeply established program and growing opportunities driven in part by shareholder activism.
We're seeing strong demand across our advisory practices globally, including restructuring engagements.
Turning to expenses, we continue to demonstrate our cost discipline and ability to manage the from through cycles.
Our compensation ratio for 29 team on an adjusted basis.
Was 57.5% up from a record law with 55.1 person in 2018.
I don't know warning basis, our annual comp ratio was 57.7% compared to 55.8% for 2018.
Our comp ratio was well within our targeted range.
Adjusted non compensation expense for the year rose, 3% to $499 million, reflecting our increased investments in the business.
Currently our technology infrastructure, which we have highlighted throughout the year.
Full year 29 team, our non comp expense ratio of nine <unk>, 19.6% remained within our targeted range.
Effective tax rate for 2019 was 24.1 per cent compared to 22.7% a year ago. This was in line with our expectations of an annual effective tax rate in the mid Twentys.
The coming year 2020, we continue to expect an effective tax rate in the mid 20% range.
Turning now to capital allocation.
We continue to generate strong cash flow and return capital to our shareholders. In 29 team. We returned $850 billion, primarily through a combination of share repurchases and dividend.
During the year, we repurchased 13.7 billion shares which included 1.7 million in the fourth quarter.
As a result, our fourth quarter diluted weighted average share count declined by 9% from the prior year 215.5 million shares.
In 2020, we expect to continue our share repurchase program at a minimum to offset potential dilution from our year end equity grants.
Our total outstanding repurchase authorization that now 370 million $379 million.
I'll now conclude our remarks. Thank you Evan your is off to a strong start overall, the global macro enough macroeconomic environment remains constructive fundamentals for global equity markets are steady and credit conditions remain favorable.
We're seeing momentum in global M&A, including Europe , that's business confidence gross and despite global trade sanctions, we've seen an increase in cross border transactions around the world.
The forces driving global strategic activity remain in place.
Technology, driven disruption continues to be a catalyst for M&A across industries shareholder activism has become a global phenomenon.
Last year almost half of all activist campaigns had an M&A. He says in addition climate ready because becoming increasingly relevant to company valuations and there's an emerging catalyst for strategic activity our industry expertise as well entrenched in our asset management business and we are building out it out this expertise to suffer.
[noise] International Advisory, we are well positioned squeeze the most sophisticated strategic and shareholder advisory capability deep relationships in local markets around the world and the expertise to global sector in specialty teams in asset management institutional investors increasingly dividing the portfolios between low cost passive strategies and high value added active strategies.
We have a world class investing franchise in markets that reward fundamental research and our quantitative strategies are competing effectively in the market for low cost products, we see opportunities for growth across our businesses and we are allocating our resources. Accordingly, we remain focused on serving all of our claims well, what we manage the firm for profitable growth and shareholder value.
Long term now, let's open the call to questions.
Thank you if you'd like to ask your question. Please signaled by pressing star and one on your telephone keypad.
We are using them speakerphone. Please make sure your mute function is turned off whenever signals to reach your equipment again, not a star and then one to ask a question. We can take our first question from Brennan Hawken of yes. Please go ahead. Your line is open.
Hi, Good morning, Thanks for taking the question just wanted to ask on expenses.
Non comp really looks quite good versus at least with what I had been expecting.
There's some onetime any onetime noise in there that we should adjust or.
Think about when we're considering a baseline on which to build here into 2020.
Yeah.
Hey, Brian Good morning.
Yeah.
As we set than your longtime came in about $130 million. In Q4, you know we continue to focus on maintaining cost discipline as we've talked about throughout the year. This year non comp increases reflect a couple of things. One is the continued rolling out of our technology investment as well some additional marketing business development as we started ramping up more more.
Marketing in the middle of this year and it was offset you mentioned by a couple of other items, most most notably lower pension costs are in this year versus last year last year Q4, we had some some higher pension cost, but I've got a crude in that quarter and this year, we had less pension costs that occurred so I guess, that's the one component, but I'd say.
The combination of the cost discipline that we've got that we've been working through throughout the year, but for your on an ongoing basis I think we expect to remain at elevated levels for the next few quarters as we've mentioned as we continue to roll in our technology projects. We expect we expand hiring continued to grow our real estate.
Footprint, our grow grow our real estate footprint to for the expansion as we invest in the future I think what can you know Brad So it's important to remember spending in our non comp the way we think about it it's very much strategic spending yeah, we're creating a stronger platform stronger more vibrant platform to accelerate growth. So I think you know this quarter was a good corner, we got a couple of.
A couple of components in there that were helpful. But I think it's it's sort of inline with the way we've been managing costs throughout the year.
Great. That's that's really helpful.
Appreciate the I appreciate the time.
Thank you we can now take our next question from Chris was of a Wolfe Research. Please go ahead. Your line is open.
Hey, guys good morning.
Morning.
Just wanted to ask one quick one on the share count on recognizing the amortization of historical stock of girls.
Generally higher in the first half of each year and that 2019, I've seen elevated net buybacks.
After the net debt issuance and with a lower stock price how should we think about.
Appetite for buyback and kind of the cadence of buyback over the course and 2020.
Sure.
Great I'll take that one I mean look we continue to focus on it we've been saying focus on returning excess cash to our shareholders.
As you mentioned, new we got accelerated a lot of buybacks earlier in this year as we mentioned we bought back 30.7 million shares over the course of the year frankly, almost $20 million shares over the last 15 months. So I mean at a minimum but we always say, we're going to offset the dilution we got.
This quarter, we bought back enough shares to offset the amortization of share effectively keeping the weighted average share count flat.
I think if you think out into 2020, you know we're going to continue to use the excess cash flow to buy back shares. The first couple of quarters, we focus on buying back the dilution and then as we get later into the year, we see what kind of excess cash we have we'll be putting it to work to a two to work to reduce the share count as best we can.
Got it thanks, and then just one more on.
Slows in the asset management business, you saw a much better slows in December .
I want to read it too much into one data point and I heard your color around.
Regulations for Nexus mergers in January so just kind of wanted to see if anything's changed in your outlook. There at all I can you speak to.
The uptake of some of your newer launches and comment on any allocation trends, you're seeing a culture climates.
Sure. So look I think when you think about.
Flows if you said we had positive net flows in Q4.
And we've had some outflows net outflows at the beginning of this year and well look you have to remember as we always say we are in a lot of most of our assets 85% of our assets are in institutional side is pretty lumpy, so you're going to get some moving from time to time.
For the remember we had oh over $13 billion of gross inflows just in Q4, so inflows and outflows there's always material movements in every can can ever given corner. So I think you know our outlook remains the same as it's been a you know we've seen some.
From absent outflows as we called out in the EMM platform in the quarter and a full year and it's specifically as we said in the past specifically in the value part of our platform we've talked about value under.
Underperforming growth in quality.
He has been under pressure out of favor as as you as you all know how to grow part about platform is performed really well, we're having great performance there and indeed performances is pretty strong across most of the land that we have over 70% of our funds were outperforming on a ones your basis and so I think you know our apart our trends will continue I think we expect to see some metered outflow.
Some additional outflows as we said in some of the emerging markets products.
In this quarter and you know I didn't but I think our outlook for the business continues to remain the same we're focusing on performance and we expect the flows will follow.
Great. Thanks for answering my questions.
Thank you we can never take our next question from Devin Ryan of JMP Securities. Please go ahead.
Great Good morning, guys.
Right.
First one here just on.
Operating leverage in the model and interest expectations and how we should think about decremental margins just given some of the moving parts with some of the headcount changes late last year, but then also your your commentary around investment into the business continuing and then hopefully there's some revenue growth in 2020 as well so just trying to.
What that altogether.
At an update on on any moving parts that we should be thinking about offering from organs.
Sure. So I'll take the first part of this and then if theres follow up with that but no some of the specifics.
What I'd say is look it's pretty straightforward when there's.
Revenue growth, we tend to get pretty good operating leverage in that business and revenue declines its more difficult to to get that kind of operating leverage is.
And I think we do a pretty good job in the revenue declined to manage the real cost of compensation, which reflected in the award.
Both sides of the business.
So what I'd say is this year feels better than last year at the start we've got strong momentum going into 2020. It feels a lot better to me that it did at the same time last year.
So we would get revenue growth. This series you should expect to see improved.
Operating leverage in the business.
Got it perfect. Okay, and then just one on the advisory backdrop and enjoy great to see the improvement in some relative to a year ago.
When I talk to investors one thing that continues to come up is just how she wants elections could start to effect to the market if at all and I think there's some concern.
Closer or start to create a little paralysis, and so I'm curious if you're hearing about that at all from clients. If you had to acute whether.
It feels like that's going to be Big factor War.
Friends that are driving the conversations today.
Did you ask it was stronger than you know.
From that.
Well I think right now the drivers of the market.
Or related to the macro environment the economy as a whole which is remains pretty robust in the U.S. and it's stabilized and probably improving imports from Europe .
And.
If you look the traditional factors that drive activity credit valuation confidence levels.
Credit ratings widely available breakthrough historic lows spreads are reasonable.
Financing again widely available valuation is probably a little retuned parts of the market will more reasonable in other parts of the market.
I think in terms of confidence levels trade tension and said been reduced with the phase one of the China trade agreements in the and the.
Mexico, and Canada agreements signed I.
I think that helps.
And the election itself is we get closer perhaps there's volatility around that but again I think what are the lessons that the last 12 years is it often times less gets done after election than people expected because of that nature of.
Ladies and Super majorities in Congress and the inability to get that much there and so I think in some ways.
There are obviously.
It'd be concerns around election, but they're also issues that kind of moderate that I think as we get close to the election, we'll see but for the moment.
We don't see much.
Commentary around the election stepped in deal activity.
Great that's helpful color. Thanks.
Thank you we can there take our next question from Richard Robinson of Goldman Sachs. Please go ahead.
Okay. Good money goes I was hoping you could expand a bit on some of the momentum that you'll see them European business and I guess specifically the question is now there's a clear path for Brexit do you think activity is going to accelerate from here or do you think they'll be more of the tried this to the strength that you're seeing opened up six months. Thanks.
Sure. So I think we saw us pickup in activity in Europe in the first half of 19 that reflect what's reflected in closings and the or completions in the fourth quarter for us and things feel a little more robust right now than they did a year ago, even in Europe , and obviously for us as a whole for.
Right now in terms of Brexit or clearly having more certainty around Brexit is helping the investment clients and a the decision making climate in the UK in particular and I would expect so we expect that there'll be a pickup activity in the UK I think we've already seen some of it.
Starting and dialogues are increasing and I think with credit conditions. The way. They are and then such I think we will see a pick up there.
As a follow on have you seen any shift between strategic because its financial sponsor activity over the course of last few months and don't have anything that's going to track and 2020.
Well I think we'd be amount of capital that's going into private equity or activity levels in private equity going to remain high credit conditions that robust as I said before.
And Ah you know that the need to invest it also the need to.
But find realizations I portfolios keep that to be a very robust market as a strategic market remains active so I think overall both markets are healthy.
Good Thanks a lot.
Thank you we will know take our next question from Mike Brown of KBW.
Hi, good morning kind of an item.
Morning.
So I appreciate the color on the activity levels and a any additional color on on your Ah Ah you had mentioned that cross border has kind of improved as well just I was looking to get a little more color as to kind of what are you know which regions you're kind of seeing.
In that and Ah, but also appreciate some additional color on what you're seeing in so many other regions outside of its kind of your out but what are you seeing and Latin America, Canada or other parts of Asia. That's all.
Okay.
You know there's been a for us at least some pick up in cross border activity within Europe .
Cross border into the U.S., we had a couple of nice transactions announced in the second half a year.
And ER and some activity on the part of the some of the large Chinese companies into Latin America.
I think activity in Asia has been more muted on activity from Asia into the U.S., obviously, much more muted, particularly trinseos much more muted and China into Europe still some transactions I think we'll see a little bit of a pick up into the UK perhaps.
Over the course of year.
But not at the levels there were a few years back but overall it's okay.
Okay, Thanks, and you're just follow up on the capital return question.
I appreciate that probably kind of reevaluates once you get to the second half a year, but I guess as we think about kind of your current valuation at what level would you look to maybe do less buybacks and shift back to more of a special dividend to return any excess cash to investors.
Sure.
You know I think we've been we've been pretty clear all year about the way we've been thinking about it now you know shifting our focus a little bit more towards the share repurchases.
After some discussions with shareholders and obviously looking at the value we've been trading at I don't think we have a hard value that we would say they we trigger one to the other I think we were in this mode, where we see significant value into shares are going to continue due to use our excess cash flow for share repurchases over that period.
I think that served us well I think what we're going to continue to do as we've always done I have a balanced approach to our capital management strategy.
Which starts obviously with our common dividend.
Gradually increasing over the years I think we would expect to continue to gradually increase it.
To to match the growth rate in the business and of course to offset any compensation pollution. After that after we figure out whatever cash we need in the business. The rest will be returned to shareholders and we make those decisions as we go throughout the year, but right now we're very we feel good about the business as Ken said, we feel good about the outlook has to go into this coming year.
I think though our goals would be to continue on our our current plan of repurchasing shares I would say our capital management strategy as a hole in our goal is very clear you're going to be prudent.
Well as opportunistic and capital structure and capital punishment and I think we've been doing that.
Great. Thanks, guys.
Hi, Good we'll now take your next question from Jeff Pact of Piper Thunder. Please go ahead. Your line is open.
Morning, guys. A couple from me looking at non comp expense I mean, really only being up 3%. Your year 2018. Despite all the investments is I think pretty good should we be thinking about a similar growth rate and 2020, given that you're still investing.
Yeah, So look good and because we said that we expect the dotcom to come out even a little higher than I did I think we focused.
As we go after the beginning of this year with revenues borrowing to really tightened up a little bit I think some of the benefits came from pushing out some of the expenses into next year and so I think we're expecting or see additional growth in non comp we expected to remain at elevated levels over the coming quarters as more of the technology projects that we really started over the last.
18 months starts rolling into the non comp line that we start amortizing those expenses. So I think yeah. We would expect to see continued to grow a probably at or above that level and going back to sort of where the averages were been off for most of this year.
Okay, and something I don't tend to have so much about what the corporate segment revenues were pretty strong there relative to at least what we were expecting our their items to highlight there. It is there also kind of a starting point as far as a run rate that we should think about for that line.
Sure. So I look you know we had higher corporate revenues. This year as you know there's lots of components that go into the corporate line Thrace, It's everything that doesn't really go into the business as a and there's just a lot of component. It's everything from the cash and returns that we get on cash as you know that that's been doing changing as rates have gone up around the world.
Cash position starts to earn some benefits FX revaluations any insurance.
Proceeds, but most importantly, it's related to other investments legacy private equity that we have on the balance sheet as well as all of our seed portfolio that we have for asset management business any of the hedged and unhedged components any gains or losses go through the corporate revenue line. So as you know it it can be a little bit of volatility from quarter to quarter.
This quarter I think a lot of those things kind of moved in our direction and so at about $12 million corporate revenue I'd say for the year $29 million. There's certainly at the higher end, where we've been historically I think it you know from a framework of when we start the beginning the year, we kind of think on average it could go back over the last two or three years $3 million to $5 million is proud.
The the right area, but again, there's going to be a lot of volatility because there's a lot of components, there that move and they're just not controllable and many many cases.
Okay and on the little kind of deeper slot I guess, you mentioned earlier in your husband mentioning about systems and kind of data the investments that are in the <unk> the ability to identify opportunities early I get that nested management can you talk a little bit about how that may be helping the advisory business, which I try to historically your thought it was more.
Pure relational.
Yeah. So.
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I think.
Step back I mean, the advisory business, you're right relationships that are and obviously.
But if you sort of think about what we're effectively giving doing in the advisory business on one hand, we're helping guide boards.
Senior management is making big two strategic decisions and that's helping execute those decisions.
And in many respects, we're trying to predict the outcomes before they happen and what are the key outcomes. We're trying to predict is stock price performance around specific events and those events can be anything from the sale and spin off an acquisition.
On an asset or have a company.
A repurchase program change and allocation of capital.
Among other things and a big part of that is prediction and then prediction, what's going to happen around for them and part of that is predicting shareholder behavior. So a lot of our efforts are going into seeing if we can develop tools.
Better predict what is going to what it could happen around these events and if you think of many of the advances in data science and machine learning AI, it's really to improve your capacity to predict better and that's what we're focusing our energy.
Okay. Thank you.
Thank you will note taker next question from Jim Mitchell of Buckingham Research.
Hi, Good morning can maybe just a bigger bigger picture question on you feel obviously, a little bit better about on the environment going into the year.
Yes, given all the different pockets of revenue whether its capital advisory Sovereign Advisory M&A, what do you I guess most excited about in terms of the growth prospects from here over the next 12 to 24 months, where where do you see.
The greatest opportunity where are you investing the most.
The question. So what are the great things about our franchise and the advisory side as we have enormous white space. So there's a plethora places where.
Theres opportunity to invest and so part of our challenges just drilling down on the places where we think there is the most opportunity on the best chance for success I think a few areas it sort of jump out or following the trend is of where capital is going and one of the things. That's happening is obviously an enormous amount of capital is going towards an alternative investments.
As an equity on private investments and one of the things, which we are really focused on is making sure that we're well positioned to capitalize on that.
Trend on the advisory of inside that means making sure that we are really well positioned.
With.
What we described as the cross cap market, what we think okay private owners of assets that could be the sponsor universe, but increasingly as families.
And many of the large pension funds and positioning yourselves or Netflow capital is very important and also helps drive or PC a business. So that's another area of which is very important then of course, making sure that we're really focused on the things that drive our business as a whole which are relationships with big important companies do even most important things. They do and then also making sure that were.
On the cutting edge in terms of capabilities around advice, which you know we've demonstrated I think in making sure that our shareholder activism practices on the cutting edge both in the United States and now, especially in Europe , where I think we're usually the market leader there.
That's helpful and is there any long term.
Opportunity or a in China as they opened up their markets is that something you think you need to start positioning for field well positioned for if that happens.
Well I think on the advisory side, we're very well positioned for that we have an outstanding team in China, but I think is probably easily one of a handful of best advisory practices in China, where the full team built out based in a mix of Beijing in Hong Kong.
And then on the asset management side of the business I think some of the changes in the regulatory environment in China.
Open up some significant opportunities we're all asset managers in terms of distribution you know that's something we're keeping around.
Okay, great. Thanks.
Thank you.
No take our next question from mining go SATA of Morgan Stanley . Please go ahead. Your line is open.
Hi, good morning.
I was wondering if.
I was wondering if you can just give us an update on the business realignment that you on that that last quarter. So I'm on the asset management side. I think you previously mentioned that there would be at 300 to 400 million drag on he you I'm growth associated with the strategies that you were closing down so.
Is that already in the run rates now and you.
Maybe separately you can I'll just talk about.
How you're thinking about reinvesting some of the dry powder that he created from that realignment.
Sure. So you mentioned, we announced in Q3 business realignment, we expected it to go go through Q3 in Q4, we completed our program in Q4, as we said it impacted approximately 200 employees split between financial Advisory asset management and corporate you know I think.
Yes, I mean, given the current environment for the first half of this year. We we saw the business performance, we want that to get ahead of the curve.
We thought it was good opportunity take a hard look and identify areas of business strategy. As you know some of that that's we've made a that were performing slower or less opportunity the future to take initiative to kind of take those off the table and redeploy them in other areas, where we've been continuously reinvesting throughout the year and you can see that in fact, it or even with the.
Impacted employees relating to business realignment, our head counts roughly flat you know within 1% to where we started the year. So we've been continuously to read reinvesting this into the areas that we continue to see as bigger opportunities. So this was more for austin's sort of self funding some for the growth opportunities somebody investments to be wanting to make and I think a lot of that.
After relate to the areas were kind of has mentioned that we see bigger opportunities in the future. Some of the components of financial advisory, where we think the big if opportunities from a white space perspective.
As we've talked about in the past and also on the asset management, just making sure we're putting resources in areas of growth such as alternatives and others and just redeploying on a consistent basis into the areas that are doing well in our greatest opportunity.
Got it and then just a quick one for me on the on the non comp side, you mentioned increased marketing and business did lots on this quarter, where are you spending the incremental dollars and is that a change in strategy at the margin dollars that just normal quarter to quarter volatility.
Yeah, that's normal quarter to quarter volatility I mean, it's really marketing business development throughout this year was a little bit higher than it's been the path.
As we saw the slow down revenues, specifically in the financial Advisory business, we had a higher marketing costs as we spent more time on the road engaging with clients.
And that's that's just natural in the business. There I don't think there's any material change in the way in which we're managing the business or seeing the the type spend we're doing this has always been kind of goes up and down depending on business activity, depending on closings, depending on the types of reimbursements, we get from clients. So I think it's it's sort of in that range and I don't think defending spin.
I think there than I would call out.
Got it thanks very much.
This now concludes the Lazards conference call. Thank you for your participation.
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