Q1 2024 Lazard Inc Earnings Call
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Speaker Change: Good morning, and welcome to Lazard first quarter 'twenty 'twenty four earnings conference call. This call is being recorded currently all participants are in a listen only mode. Following their remarks, we will conduct a question and answer session and instructions will be provided at that time, if any once you drill.
Speaker Change: Quire assistance during the call. Please press the star key followed by zero on your telephone keypad at this time I would like to turn the call over to Alexandra Deignan.
Alexandra M. Deignan: Lazard head of Investor Relations Treasury and corporate sustainability. Please go ahead.
Alexandra M. Deignan: Thank you Britney good morning, everyone and welcome to Lazard to earnings call for the first quarter of 'twenty 'twenty, four and Alexandra Deignan head of Investor Relations Treasury and corporate sustainability. In addition to today's audio comments, we have posted our earnings release on our website. A replay of this call will also be available on our website later today.
Alexandra M. Deignan: Before we begin let me remind you that we may make forward looking statements about our business and performance.
Alexandra M. Deignan: Factors that could cause our actual results level of activity performance achievements or other events 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.
Alexandra M. Deignan: Art assumes no responsibility for the accuracy or completeness of these forward looking statements and assumes no duty to update these forward looking thing.
Alexandra M. Deignan: Today's discussion also includes certain non-GAAP financial measures that we believe are meaningful when evaluating the company's performance.
Alexandra M. Deignan: Reconciliation of these non-GAAP financial measures to the comparable GAAP measures is provided in our earnings release and Investor presentation.
Alexandra M. Deignan: Hosting our call today, Peter or has that started to chief Executive officer, and Marianne batch <unk> Chief Financial officer after our prepared remarks.
Alexandra M. Deignan: Dan will be joined by Evan Russo Chief Executive Officer of asset management as I open the call for questions I'll now turn the call over to Peter.
Peter: Thank you Allie and good morning to everyone. As we continue to pursue our long term objectives Lazard reported a record first quarter with firm wide adjusted net revenue of $747 million, an increase of 42% year over year.
Peter: Going into 2024, we anticipated that interest rates would stay higher for longer.
Peter: During the first quarter, we saw this environment materialize with implications largely as expected.
Peter: Relative to a world in which interest rates are rising even stability in rates facilitates increased activity in M&A as buyers and sellers of line on valuations.
Peter: Deal financing becomes more readily available.
And beyond M&A approaching debt maturities are interacting with this higher for longer landscape to produce stronger activity in restructuring liability management and private capital solutions.
Peter: Impact of this market backdrop, along with our focus on growth and increasing productivity drove record first quarter revenues within our advisory business.
Peter: At the same time higher rates increase the appeal of short term investments such as T bills and money market funds, which reduces new allocations into active equity strategies.
Peter: This effect should dissipate as rates eventually decline and investors put money more money to work.
Peter: The current prolonged higher rate environment, we had solid revenue growth within asset management in the first quarter and average AUR increased 6% from year end 2023.
Peter: First quarter performance also reflects continued efforts to further strengthen our platform by delivering excellence in the products, we already offer enhancing our distribution structure and team and investing in areas of future opportunity.
With our strong first quarter results represent the ongoing execution of our long term strategic plan and reinforce our belief that 2024 will be a better year for our business.
Peter: Share more on our outlook shortly but let me first turn the call over to Mary Anne.
Mary Ann Betsch: Provide further details on the quarter.
Mary Ann Betsch: Thank you.
Mary Ann Betsch: As Peter noted today, we reported record first quarter firm wide adjusted net revenue of $747 million up 42% from the year prior.
Mary Ann Betsch: Increase in firm wide revenue was driven primarily by our financial Advisory business Financial Advisory adjusted net revenue was 447 million for the first quarter up 63% from the first quarter last year.
Mary Ann Betsch: We had strong performance across the U S and Europe, which included several large cap transactions completed during the first quarter as well as in public and private capital markets and restructuring activity.
Mary Ann Betsch: We saw the pace pick up across deal sizes, and geographies, which also contributed to this quarter's revenue growth.
<unk> completed a number of marquee transactions in the first quarter, including Immunogen acquisition by Abbvie Sema based therapeutics acquisition by Gilead and <unk> merger with London metric.
We also advised on several capital markets listings in Europe, including Gal, Germans IPO and Sodexo spin off enlisting our proxy.
Mary Ann Betsch: As well as fund raising for wind Church capital Rubicon founders and Mccarthy capitals.
Mary Ann Betsch: Turning to asset management adjusted net revenue was 276 million for the first quarter up 1% from the fourth quarter and 4% higher than the first quarter last year.
Mary Ann Betsch: Management fees for the first quarter were up 4% from the fourth quarter and up 3% compared to the first quarter last year.
Mary Ann Betsch: <unk> higher assets under management.
Mary Ann Betsch: As of March 31, we reported a U M. F 250 billion, 2% higher than December 31, 2023, and 8% higher than March 31 2023.
Mary Ann Betsch: During the quarter net outflows of $6 6 billion and foreign exchange depreciation of $3 6 billion were more than offset by market appreciation of $14 billion.
Mary Ann Betsch: Average AUM for the first quarter was 247 billion up 6% on a sequential basis and 9% higher than the first quarter of 2020 Street.
Mary Ann Betsch: We continue to have positive and constructive engagement with clients and we are seeing increased client interest in strong performing strategies across our international and emerging markets platforms and quantitative products.
Mary Ann Betsch: Mm wide revenue also included corporate revenue of 24 million in the first quarter, consisting primarily of investment gains and interest income along with a one time gain on the sale of a legacy investment.
Mary Ann Betsch: Now turning to expenses for the first quarter of 2024, our adjusted compensation expense was 493 million equating to a ratio of 66%.
Mary Ann Betsch: This compares to 75, 7% for the first quarter one year ago.
Mary Ann Betsch: For the first quarter, our adjusted non compensation expense was 134 million, 6% lower than the prior year equating to a ratio of 18% compared to 27% the year prior.
Mary Ann Betsch: The year over year decrease was primarily due to lower professional services fees and other expenses, partially offset by higher travel expenses.
Mary Ann Betsch: During the first quarter, we completed our targeted head count reduction of 10%, which has been in progress since April of last year.
Mary Ann Betsch: We remain focused on expense management, while making targeted investments in the business.
Mary Ann Betsch: Shifting to taxes, our adjusted effective tax rate for the first quarter was 32, 6% compared to 32, 1% for the first quarter of 2023.
Mary Ann Betsch: We currently expect our full year tax rate to be in the high 20% range.
Mary Ann Betsch: Turning to capital allocation in the first quarter of 2024, we returned $121 million to shareholders, including a quarterly dividend of 44 million share repurchases of 22 million and $56 million in satisfaction of employee tax obligations.
Mary Ann Betsch: Year to date, we have repurchased 958000 shares and we have remaining authorization available for $163 million.
Mary Ann Betsch: Additionally, yesterday, we declared a quarterly dividend of <unk> 50 per share.
Mary Ann Betsch: We remain committed to balancing investments in growth with a return of capital to our shareholders.
Mary Ann Betsch: Finally during the quarter, we refinanced a portion of our debt by issuing 400 million in seven year senior notes at a 6% coupon.
Now I'll turn the call back to Peter.
Peter: Thank you Marianne.
Peter: Our outlook for a productive 2024 is reinforced by our strong first quarter results and is further supported by several factors.
Peter: As we have said before in financial advisory the tailwind behind transactions include powerful factors, such as innovation and technology energy transition the biotech revolution, and the shift of supply chain as companies de risk.
Peter: These tail winds continue to propel M&A activity.
Peter: Meanwhile, headwinds have generally diminished in force over the past few quarters during the first quarter market expectations became more closely aligned with the higher for longer rate environment, reducing a source of mispricing risk in the markets. In addition, the difficulty of finding financing when rates were.
Peter: Rising as largely abated and the government's deterrent effect on regulatory matters has weakened in the wake of recent court decisions.
Well then he headwinds have tapered geopolitical concerns remain top of mind with significant focus on the potential for escalation and spillovers from the ongoing conflicts in Ukraine, and the Middle East East.
These concerns resulted in increased client demand for a geopolitical advisory team and in general are more than offset by the fading of other headwinds.
Peter: Overall, the interplay between these tailwind and headwinds remains a shift towards a more constructive market environment.
Peter: This shift is occurring alongside our efforts to increase revenue per MD, which is trending well.
Peter: Combined effect of the market and our own effort is ongoing momentum and fairly widespread M&A activity, including in health care Industrials Tech and energy across both North America and Europe.
Peter: We have also significantly expanded our connectivity to private capital, which is another growing source of strength.
Peter: Various efforts across sponsor coverage capital solutions.
Peter: Racing in restructuring liability management increasingly build on one another and attract new business opportunities.
Peter: And liability management, specifically conversations with clients are growing as they seek innovative ideas to address approaching debt maturities well historically, we've been more debtor focused we've invested over the past few years to evolve our restructuring liability management practice, and we now cover both creditors and <unk>.
Peter: <unk> quite effectively.
Peter: Finally, attracting world class talent to Lazard remains a top priority for financial Advisory. We are pleased to have hired four new managing directors during the first quarter and this month with ongoing productive or recruiting conversations underway.
Peter: Turning to asset management, we continue to strengthen our platform and pursue excellence in our core strategies and product as we evolve into newer areas of opportunity.
Peter: Clients look to us to deliver solutions that help diversify and manage risk in their portfolios and we remain focused on enhancing performance and distribution to strengthen the core strategies products and areas that need our existing client demand.
Peter: Examples include recently refreshing the depth and expertise of our U S equity team and welcoming our new head of our Japan business as we expand client engagement and distribution efforts more broadly across Asia Pacific markets.
Peter: As I mentioned earlier, the current interest rate environment means that across the investment industry Kashi is accumulating on the sidelines.
Investors are patient given current short term yield and are looking to be opportunistic about returning to risk market.
Peter: This environment will eventually shaft at central banks moved to reduce rates and our ongoing efforts to strengthen the current platform supports our ability to capture demand when cash is put back to work and investors look to diversify.
Peter: As we evolve the business into new areas of opportunity. We completed our initial investment in a strategic partnership with Alliance partners in Paris.
Peter: Result is a new asset management client offering that provides private market solutions within the technology industry.
Peter: This partnership reflects our long term strategic plan to meet future client opportunities by providing private market alternative investment and wealth management solutions balanced with investing in the strategies. We will be we believe will be most attractive within liquid public markets in the years to come.
Peter: As evidenced by our strong first quarter results, we continue to make progress towards Lazard 2030, and our long term strategic objective to double firm wide revenue and deliver deliver an average annual shareholder return of between 10 and 15% through 2030.
Peter: In pursuit of enhancing insights for our clients and increasing overall firm efficiency over time, we are actively exploring and deploying generative AI and we believe that 'twenty 'twenty four will be a critical transition year to a new way of conducting business in both financial advisory.
Peter: And asset management.
Peter: We're excited about the prospects for serving our clients, even more effectively while freeing internal resources for higher value added higher value added activities.
Peter: Technology evolved.
Peter: In addition, a reenergized focus on brand and culture is resulting in increased client conversations and new business opportunities.
Peter: Faithful research and unique convening event, we are building on our highly regarded brand and further enhancing our relevance for clients.
Peter: A high degree of enthusiasm across the firm to aim higher together is reinforcing our increasingly commercial and collegial culture.
Peter: Importantly, it is when risks and opportunities are most complex that business investment leaders and government reach out to Lazard.
Peter: Our global network intellectual capital and long history of collective experience and knowledge continue to further our unwavering mission to provide the most sophisticated and differentiated advice and investment solutions for our clients.
Speaker Change: Now, let's open the call to questions.
Thank you if you have a question at this time. Please press the star one on your telephone keypad. If your question husband answered you may remove yourself from the queue by pressing star too. So others can hear your questions clearly yeah. So do you pick up your handset for best style quality well take our first question from Stephen to Bock with.
Stephen Bock: Both research your line is open.
Stephen Bock: Okay.
Stephen Bock: Good morning, This is Brendan O'brien filling in for Steven.
Brennan Hawken: Just to start I, just wanted to touch on the comp ratio.
Brennan Hawken: Revenues, rather a record level of <unk>, but the comp ratio is still pretty elevated I know that youre still dealing with the overhang from prior year deferrals, but wanted to get a sense as to whether this is a reflection or of your view on the sustainability of this revenue level of one Q and as we look out beyond 24 can.
Brennan Hawken: Can you speak to your confidence in your ability to get the comp ratio back to the targeted range.
Speaker Change: Maryann, you and Charles I'll take that one hi, Brandon.
So as you know running in years prior to 2023, we used to start off the year using the prior year ratio as kind of a proxy for the best estimate in the current year because early in the year, it's hard to predict where revenues are going to land and abandon outcomes is still pretty wide. So when we looked at that.
Speaker Change: For this year with last year's ratio was pretty high and so we didn't feel that was appropriate, especially on revenues. As we've said are expected to be better, but there still is a lot of unpredictability in the year and also in our recruiting efforts. We're really excited about the trajectory there, but theres a cost to that as well so we do.
Speaker Change: Thank you using last year's rate made sense, but we as you said you now moving towards our ratio was an important objective for this year and we actually hope to be able to do better than that as the year progresses, and then looking at 2025 I you know what we'll get back to the target as quickly as we can.
Operator: To log out to begin, should you need operator assistance during today's program, please press star zero. Good morning, and welcome to Lazard's first quarter 2024 earnings conference call. This call is being recorded. Currently, all participants are in a 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 zero on your telephone keypad. At this time, I would like to turn the call over to Alexandra Deignan, Lazard, Head of Investor Relations, Treasury, and Corporate Sustainability. Please go ahead.
Speaker Change: That's great color. Thank you.
Speaker Change: I guess for my follow up I wanted to touch on the asset management business, while trends in advisory look quite strong outflows in asset management segment have continued to accelerate.
Speaker Change: Alright, your improved performance.
Speaker Change: I understand it's still early days in terms of execution on your growth initiatives for the business and it sounds like demand for your products is beginning to pick up but when thinking about value creation for the franchise I just wanted to get a sense as to how you are evaluating your thinking about the path forward and would you consider strategic alternatives if the process of re <unk>.
Alexandra M. Deignan: Thank you, Brittany. Good morning, everyone, and welcome to Lazard's earnings call for the first quarter of 2024. I'm Alexandra Deignan, Head of Investor Relations, Treasury, and Corporate Sustainability. In addition to today's audio comments, we have posted our earnings release on our website. A replay of this call will also be available on our website later today.
Speaker Change: Operating growth in this segment is taking longer than anticipated.
Alexandra M. Deignan: Before we begin, let me remind you that there are important factors that could cause our actual results, level of activity, performance, achievements, or other events to differ materially from those expressed or implied by the forward-looking statement, 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. Reconciliation of these non-GAAP financial measures to the comparable GAAP measures is provided in our earnings release and investor presentation.
Speaker Change: Sure let me take that and then maybe Hasnt can add some additional color first let's just talk about what's happening in the business. We have a significant amount of very very strong performance.
Hasnt: We can go into that.
Speaker Change: In a bit but.
Speaker Change: With regard to the net outflows in the quarter that was I think disproportionately driven by the phenomenon that I mentioned, which was a higher for longer environment means there's more cash are.
Speaker Change: Sitting on the sidelines until the inflows into active strategies like ours.
Were depressed as a result.
Alexandra M. Deignan: Hosting our call today are Peter Orszag, Lazard's Chief Executive Officer, and Mary Anne Betsch, Lazard's Chief Financial Officer. After our prepared remarks, Peter and Mary Anne will be joined by Evan Russo, Asset Management's Chief Executive Officer, as they open the call for questions. I'll now turn the call over to Peter.
Speaker Change: That will reverse and because we do expect that interest rates will be cut and that will alter the flow of investment dollars.
Speaker Change: So there is a bit of a.
Speaker Change: Sui generous or a phenomenon associated with the high higher for longer environment.
Peter R. Orszag: Thank you, Ali, and good morning to everyone. As we continue to pursue our long-term objectives, Lazard reported a record first quarter with firm-wide adjusted net revenue of $747 million, an increase of 42% year-over-year. Going into 2024, we anticipated that interest rates would stay higher for longer. During the first quarter, we saw this environment materialize, with implications largely as expected. Relative to a world in which interest rates are rising, even stability in rates facilitates increased activity in M&A as buyers and sellers align on valuations.
Speaker Change: In terms of the underlying strategy I think we're making a lot of progress on what I see as the three key areas. One is to continue to.
Speaker Change: Strengthening the core.
And we gave you some examples of that with regard to the U S equities team.
Speaker Change: The second is to continue to evolve the distribution.
Speaker Change: Channel give you an example of that with regard to Japan and then the third is to continue to move into newer areas of opportunity for us in private markets.
Speaker Change: And and associated products as an example, there is a life partner so there.
Speaker Change: There is progress that is occurring.
Speaker Change: Evan you wanted to add anything to that and then I can come back to the other part of the question in a second I think you summarized it well I think at the end of the day this quarter.
Evan Lawrence Russo: As Peter said the market environment, given the significantly higher yields on short duration money markets, we start to see that at the beginning of the year I think we would expect that to continue through the middle of the year until central banks start to get more visibility on the lowering of rates. There's certainly a lot of money starting to sit on the sidelines. There's about nine trillion dollars I think last estimate I saw.
Peter R. Orszag: Deal financing has become more readily available, and beyond M&A, approaching debt maturities are interacting with this higher for longer landscape. produce stronger activity in restructuring, liability management, and private capital solutions. The impact of this market backdrop, along with our focus on growth and increasing productivity, drove record first quarter revenues within our advisory business. At the same time, higher rates increase the appeal of short-term investments such as T-bills and money market funds, which reduces new allocations to active equity strategies. This effect should dissipate as rates eventually decline and investors put more money to work.
Evan Lawrence Russo: He is sitting in money markets and short duration instruments, and what we're hearing from allocators and from the Investor community and our clients is that they just need higher conviction before putting new money to work. It's not a question of it's not a question of if it's a question just to win and when the right time again, and so we're starting to see that and that sort of flows through from retail or institutional but we're starting to see.
Peter R. Orszag: Despite the current prolonged higher rate environment, we had solid revenue growth within asset management in the first quarter, and average AUM increased 6% from year-end 2022. First quarter performance also reflects continued efforts to further strengthen our platform by delivering excellence in the products we already offer, enhancing our distribution structure and team, and investing in areas of future opportunity. Lazard's strong first quarter results represent the ongoing execution of our long-term strategic plan and reinforce our belief that 2024 will be a better year for our business. I'll share more on our outlook shortly, but let me first turn the call over to Mary Ann to provide further details on the quarter.
Evan Lawrence Russo: The growing.
Evan Lawrence Russo: As Peter mentioned before in some of our strategy of the globalization, So global seeing more global strategies, specifically areas like Japan, or others, which have been under allocated asset classes in the past that are continuing to gain traction. It's really a lot of client interest into those under allocated places such as <unk> and others as well as an uptick in.
Evan Lawrence Russo: In the interest that we have across our quant systematic platform. So a lot of good things going on below the surface, but some of the macro trends I think are going to take a little bit of time to work through before we see that are into flows towards the end of the year.
Speaker Change: And then just to round out the answer you had asked about the strategic alternative question as I Hope you get the sense, we see a lot of upside potential.
Mary Ann Betsch: As Peter noted, today we reported record first quarter firm-wide adjusted net revenue of $747 million, up 42% from the year prior. The increase in firm-wide revenue was driven primarily by our financial advisory business. Financial advisory adjusted net revenue was $447 million for the first quarter, up 63% from the first quarter last year. We had strong performance across the U.S. and Europe, which included several large capital transactions completed during the first quarter, as well as in public and private capital markets and restructuring activities.
Speaker Change: In this business and we also see significant synergy.
Speaker Change: Synergies that can be built further out from our outstanding content across the two businesses from our brand and from convening events that are.
Speaker Change: You know that our debt.
Speaker Change: Sure and that and that are higher that are centered around that outstanding content.
Speaker Change: That having been said we are a public company and you know we're always open to value enhancing.
Speaker Change: <unk>.
Speaker Change: Suggestions, but again I'd go back to we see a significant amount of upside.
Mary Ann Betsch: We saw the pace pick up across deal sizes and geographies, which also contributed to this quarter's revenue growth. Lazard completed a number of marquee transactions in the first quarter, including Immunogens' acquisition by AbbVie. FEMA Bay Therapeutics acquisition by Gilead and LXI's merger with London Metro. We also advised on several capital markets listings in Europe, including Galderma's IPO and Sodexo's spin-off and listing of Plexiglas, as well as fundraising for WinChurch Capital, Rubicon Founders, and McCarthy Capital.
In both businesses, including the asset management.
Speaker Change: Great. Thank you all for taking my questions.
Speaker Change: Thank you we'll take our next question is from Brennan Hawken with UBS. Your line is open.
Brennan Hawken: Good morning, Thanks for taking my questions I'd.
Brennan Hawken: I'd like to drill.
Drilling into the non comp a bit.
Brennan Hawken: This was a little better than expected this quarter.
Brennan Hawken: Is this the right building off level for non comp or was there some noise that might have flattered. The result, this quarter, how should we be thinking about it this year.
Mary Ann Betsch: Turning to asset management, adjusted net revenue was $276 million for the first quarter, up 1% from the fourth quarter and 4% higher than the first quarter last year. Management fees for the first quarter were up 4% from the fourth quarter and up 3% compared to the first quarter last year, reflecting higher assets under management. As of March 31st, we reported AUM of $250 billion, 2% higher than December 31st, 2023, and 8% higher than March 31st, 2023.
Speaker Change: I don't think that I'll take that one.
Speaker Change: So we as you know have been working hard to identify and implement cost savings and we're pleased with the results of those efforts when youre looking though at kind of quarter to quarter seasonality as you know it tends to move around a bit and if you're thinking about the rest of the year I would kind of.
Speaker Change: I assume that the cost savings that we've achieved are going to be more or less offset by increases in things like occupancy cost and market data, where I'm kind of price takers.
Mary Ann Betsch: During the quarter, net outflows of $6.6 billion and foreign exchange depreciation of $3.6 billion were more than offset by market appreciation of $14 billion. Average AUM for the first quarter was $247 billion, up 6% on a sequential basis and 9% higher than the first quarter of 2020. We continue to have positive and constructive engagement with clients, and we are seeing increased client interest in strong performing strategies across our international and emerging markets platforms and quantitative products.
Speaker Change: And then travel which is increasing as client activity picks up which is a good thing so theres kind of you know.
Speaker Change: Puts and takes there, but the first quarter you know we had a little bit of an excess benefit just based on the comparison to last year, where there were some sort.
Speaker Change: Sort of one time Pops.
Speaker Change: Yeah.
Speaker Change: Okay, but it was that.
Speaker Change: That was because the comp was high not necessarily because the base and one I'm just thinking about the base <unk> not necessarily the comp.
Speaker Change: Oh, sorry, that's what I meant was that if you're comparing non comp year over year.
Mary Ann Betsch: Firm-wide revenue also included corporate revenue of $24 million in the first quarter. All of these companies are investing primarily in investment gains and interest income along with a one-time gain on the sale of a legacy investment. Now turning to expenses.
Speaker Change: The decline is partially reflecting the fact that last year. There were some one time items in there.
Speaker Change: Okay. Okay, great. Thanks for clarifying that and then you spoke in your prepared remarks, a bit about restructuring and the activity levels that you're seeing could you speak about where restructuring revenue as a proportion of advisory has been running this is something we all used to.
Mary Ann Betsch: In the first quarter of 2024, our adjusted compensation expense was $493 million, equating to a ratio of 66%. This compares to 75.7% for the first quarter one year ago. For the first quarter, our adjusted non-compensation expense was $134 million, 6% lower than the prior year, equating to a ratio of 18% compared to 27% the year prior. The year-over-year decrease was primarily due to lower professional services fees and other expenses, partially offset by higher travel expenses.
Speaker Change: Get disclosed, but it would just be helpful to think about.
Speaker Change: How much that has contributed to your advisory business.
Speaker Change: In the past year, or so and yeah.
Particularly helpful given that the outlook remains pretty solid for that business.
Speaker Change: Yeah, So Brandon I think I'm going to give you some color, but may not fully satisfy a.
Speaker Change: The desire for a perfect clarity on this but let me I mean I'm used to that it's okay. Peter.
Mary Ann Betsch: During the first quarter, we completed our target headcount reduction of 10%, which has been in progress since April of last year. We remain focused on expense management while making targeted investments in the business. Regarding taxes, our adjusted effective tax rate for the first quarter was 32.6%, compared to 32.1% for the first quarter of 2020. We currently expect our full year tax rate to be in the high 20% range. Turning to capital allocation, in the first quarter of 2024, we returned $121 million to shareholders, including a quarterly dividend of $44 million, share repurchases of $22 million, and $56 million in satisfaction of employee tax obligations.
Speaker Change: I'm going to let me, let me give you a little bit up a little bit of backdrop here. So.
Speaker Change: First I think you know, we say restructuring liability management honestly, it's frankly, it's mostly liability management in today's marketplace and we did see a significant uptick relative to this time last year, which we believe will continue.
Speaker Change: So relative to the market, we were lagging a little bit in the beginning of last year I think we've now.
And catching up or caught up and in our rightful place in the marketplace. It's been reestablished and so I mean as an example, the you know the increase for.
Mary Ann Betsch: Year to date, we have repurchased 958,000 shares, and we have remaining authorization available for $163 million. Additionally, yesterday, we declared a quarterly dividend of $0.50 per share. We remain committed to balancing investments and growth with the return of capital to our shareholders. Finally, during the quarter, we refinanced a portion of our debt by issuing $400 million in seven-year senior notes at a 6% coupon. Now I'll turn the call back to Peter.
Speaker Change: For the first quarter relative to the first quarter of last year was this quarter's restructuring liability management was over two times what it was in the first quarter of last year, we do expect that and.
Speaker Change: An elevated level of activity will continue.
As the debt maturities that are approaching interact with the higher for longer environment, and we feel like we are now very well positioned with a more diversified team, that's covering creditors and debtors and that has much more connectivity to private capital where a lot of activities occurring.
Peter R. Orszag: Our outlook for a productive 2024 is reinforced by our strong first quarter results and is further supported by several factors. As we have said before, in financial advisory, the tailwinds behind transactions include powerful factors such as innovation in technology, the energy transition, the biotech revolution, and the shift of supply chains as companies de-risk. These tailwinds continue to propel M&A activity. Meanwhile, headwinds have generally diminished in force over the past few quarters.
Speaker Change: <unk> continue to be active frankly, even as interest rates come down. This will continue to be because of the maturity walls that will continue to be a significant area of activity.
Speaker Change: Okay.
Speaker Change: Okay. Thanks for taking my questions.
Speaker Change: Yeah.
Thank you we'll take our next question from James <unk> with Goldman Sachs. Your line is open.
James: Good morning, and thanks for taking my questions.
James: We've seen the industry M&A activity year to date improved substantially more in the U S and in Europe, I was hoping Peter you might be able to just provide them.
Peter R. Orszag: During the first quarter, market expectations became more closely aligned with the higher-for-longer rate environment, reducing a source of mispricing risk in the market. In addition, the difficulty of finding financing when rates were rising has largely abated, and the government's deterrence effect on regulatory matters has weakened in the wake of recent court decisions. While many headwinds have tapered off, geopolitical concerns remain top of mind, with significant focus on the potential for escalation and spillovers from the ongoing conflicts in Ukraine and the Middle East.
Your color on dialogues Uh huh.
James: And the differences.
James: Between the U S and Europe.
Peter: Sure look we did see a including in the first quarter. There was more of a pick up in North America than in Europe, Although both are up.
Peter: And that's generally the picture that we see for the year ahead or for 2024 as a whole which is.
Peter: A larger or a disproportionate uptick in North America, but still a healthy a healthy level of activity and and expanded level of activity.
Peter R. Orszag: These concerns result in increased client demand for our geopolitical advisory team and, in general, are more than offset by the fading of other headwinds. Overall, the interplay between these tailwinds and headwinds remains a shift toward a more constructive market environment. This shift is occurring alongside our effort to increase revenue per MD, which is trending well. The combined effect of the market and our own efforts is ongoing momentum and fairly widespread M&A activity, including in healthcare, industrials, tech, and energy across both North America.
Peter: In Europe, So as you know one of the.
Peter: Differentiated benefit or one of the Differentiators for Lazard is that we've got strong presence both in North America and in Europe, and it provides a source of diversification. If you will when there are different pockets of that opportunity last year Europe was relatively strong for us. It is still a strong year for Europe, but north.
Peter: Erica.
Peter: Consistent with that market I think we may be outpacing the market a bit but consistent with the market, we're seeing a bit more strength in North America right now.
Speaker Change: Okay, I think that makes a lot of sense and maybe just on the corporate revenue line, which did reach a record this quarter any chance you could size the gain in that line just so we can.
Peter R. Orszag: We have also significantly expanded our connectivity to private capital, which is another growing source of strength. Various efforts across sponsor coverage, capital solutions, fundraising, and structuring liability management increasingly build on one another and attract new business opportunities. In liability management specifically, conversations with clients are growing as they seek innovative ideas to address approaching debt maturity. Well, historically, we've been more debtor focused. We've invested over the past few years to evolve our restructuring and liability management practice, and we now cover both creditors and debtors quite effectively.
Speaker Change: Model the sustainability model sustainably that line item and then any color on whether you do accrue comp and non comp expenses against that line item.
Speaker Change: Yeah. So in terms of the gain I would describe it as fairly sizeable but not a majority of the corporate revenue for the quarter.
Speaker Change: So if you're just thinking about kind of the run rate for the rest of the year I would assume you know some return on our cash plus or minus investment gains on seed portfolio. So that's how I would think about that.
Speaker Change: And then in terms of the comp ratio, we really do that for the firm as a whole and it's not you know it's.
Peter R. Orszag: Finally, attracting world-class talent to Lazard remains a top priority for financial advisors. We are pleased to have hired four new managing directors during the first quarter and this month, with ongoing productive recruiting conversations. Turning to Asset Management, we continue to strengthen our platform and pursue excellence in our core strategies and products as we evolve into newer areas of opportunity. Clients look to us to deliver solutions that help diversify and manage risk in their portfolios, and we remain focused on enhancing performance and distribution to strengthen the core strategies, products, and areas that meet our existing client demand.
At this point in the year not done on a person by person basis, or you know kind of at that level of granularity.
Speaker Change: Okay, that's very clear thanks, so much.
Speaker Change: Yeah.
Speaker Change: Thank you we'll take our next question from Devin Ryan with citizens JMP. Your line is now open.
Devin Patrick Ryan: Thanks, Good morning, Peter Maryanne and Evan Thanks for taking the question.
Good morning.
Devin Patrick Ryan: So I wanted to just come back on the comp ratio.
Devin Patrick Ryan: Follow up and I appreciate the color you guys provided there and I also know that you're projecting revenues on a full year basis at the end of the year is really talk so first quarter comp accrual maybe isn't a perfect science, but.
Peter R. Orszag: Examples include recently refreshing the depth and expertise of our U.S. equity team and welcoming a new head of our Japan business as we expand client engagement and distribution efforts more broadly across Asian Pacific markets. As I mentioned earlier, the current interest rate environment means that across the investment industry, cash is accumulating on the sidelines. Investors are patient given current short-term yields and are looking to be opportunistic about returning to risk markets.
Devin Patrick Ryan: Is there a level of revenue or a range of revenues, we could think about that would be supportive of kind of driving that comp ratio or the overall margin profile back to a normalized range just trying to kind of think about that algorithm and what it looks like given that maybe the first quarter is not the best way to judge it.
Okay.
Speaker Change: Yeah, I mean, I think you know as Brendan mentioned at the top of the call. We are still dealing with the aftermath of the deferrals and the impact that that has on the current year. So that's definitely part of the equation.
Peter R. Orszag: This environment will eventually shift as central banks move to reduce rates, and our ongoing efforts to strengthen the current platform support our ability to capture demand when cash is put back to work and investors look to diversify. As we evolved the business into newer areas of opportunity, we completed our initial investment in a strategic partnership with Alaia Partners in Paris. The result is a new asset management client offering that provides private market solutions within the technology industry.
Devin Patrick Ryan:
Devin Patrick Ryan: You know and so it's I think a question of how quickly we can get back into the target range and the level of revenue certainly matters, but I don't think I would give you a magic number where you know I can I can foresee that we would hit 59, 9% rate I think it's there's a lot of inputs to it and.
Devin Patrick Ryan: So we're trending towards that but the paces just gonna depend on many factors, including how quickly the revenues recover.
Peter R. Orszag: This partnership reflects our long-term strategic plan to meet future client opportunities by providing private market, alternative investment, and wealth management solutions, balanced with investing in the strategies we believe will be most attractive within liquid public markets in the years to come. As evidenced by our strong first quarter results, we continue to make progress towards Lazard 2030 and our long-term strategic objective to double firm-wide revenue and deliver an average annual shareholder return of between 10% and 15% through 2030.
Speaker Change: Okay, Alright, that's fine. Thanks, a lot and then a follow up here maybe for Peter just on kind of broader trends within the M&A market.
Peter: We've been tracking more corporate activity really.
Peter: Really over the past year plus versus sponsors I think it's been well positioned for that given strong corporate relationships.
Peter: It does seem like sponsors are gearing up to do more and so I'd love to just kind of get some color from you around what you're seeing in that balanced Queen corporates versus sponsors.
Peter R. Orszag: In pursuit of enhancing insights for clients and increasing overall firm efficiency over time, we are actively exploring and deploying generative AI, and we believe that 2024 will be a critical transition year to a new way of conducting business in both financial advisory and asset management. We are excited about the prospect of serving our clients even more effectively while freeing internal resources for higher-value-added activities as the technology evolves. In addition, our re-energized focus on brand and culture is resulting in increased client conversations and new business opportunities.
Peter: Degree that sponsors are picking up behind the scene and kind of what's maybe shifting their behavior or catalyst for them coming back to the market. Thanks.
Speaker Change: Sure I agree with your characterization, which is to date are the strategics have been kind of leading the way, but I think we're now in the stage of the cycle, where sponsors are coming back on the playing field. So I think you've got the.
Speaker Change: The market characteristics in that characterization correct.
Speaker Change: And that's what we're seeing in our own business, which is our the share of our revenue that was coming from private capital declined over the last year or two as strategics were picking up.
Peter R. Orszag: Through insightful research and unique convening events, we are building on our highly regarded brand and further enhancing our relevance for clients, and a high degree of enthusiasm across the firm to aim higher together is reinforcing our increasingly commercial and collegial culture. Importantly, it is when risks and opportunities are most complex that business, investment leaders, and government reach out to Lazard. Our global network, intellectual capital, and long history of collective experience and knowledge continue to further our unwavering mission to provide the most sophisticated and differentiated advice and investment solutions for our clients. Now, let's open the call to questions.
Speaker Change: More quickly than private capital was.
Speaker Change: But we are in the early stages of seeing that the dialogues and activity with sponsors starting to accelerate.
Speaker Change: One thing that I would highlight is I think maybe as I said in my remarks.
Speaker Change: Unappreciated, how much Lazard has been strengthening our connectivity to private capital over the past couple of years. So that we are positioned for this shift as it occurs.
Speaker Change: And that's not just in <unk>.
Speaker Change: Private equity, but it's across the whole array of what is now a large alternative asset managers.
Speaker Change: Our focus on so our private credit.
Operator: Thank you. If you have a question at this time, please press star 1 on your telephone keypad. If your question has been answered, you may remove yourself from the queue by pressing star 2. So others can hear your questions clearly, we ask that you pick up your handset for best sound quality. We'll take our first question from Steven Chubak with Wolf Research. Your line is open.
Speaker Change: Raising restructuring liability management as I mentioned and then yes.
Speaker Change: Private equity and sponsor coverage, we've been investing in all those areas and so.
Speaker Change: Your historical perception of Lazard maybe.
Speaker Change: All in we need to evolve a little bit.
Speaker Change: Because of the investments that we've been making and I will tell you that several of the very large alternative asset managers have remarked how much our coverage has improved and how much connectivity expanded connectivity, they're seeing between lazard and their firms.
Brennan Hawken: Good morning, this is Brennan O'Brien filling in for Steven. I guess to start, I just wanted to touch on the comp ratio. You know, revenues were at a record level in 1Q, but the comp ratio is still pretty elevated. I know that you're still dealing with the overhang from prior year deferrals, but wanted to get a sense as to whether this is a reflection of your view on the sustainability of this revenue level in 1Q. And as we look out beyond 1Q, can you speak to your confidence in your ability to get the tar comp ratio back to the targeted range?
Speaker Change: Alright, Thank you very much.
Speaker Change: Thank you we'll take our next question from Brian Kenney with Morgan Stanley. Your line is open.
Ryan Michael Kenny: Hi, good morning, Thanks for taking my question.
Ryan Michael Kenny: Wondering if you could give some color on what you're seeing around the election, and how boards and Ceos are thinking through where do you sense any hesitancy in a wait and see but ultimately transpires and what the impact to the antitrust environment would be or no. Thanks.
Mary Ann Betsch: So, as you know, Brennan, in years prior to 2023, we used to start off the year using the prior year ratio as kind of a proxy for the best estimate in the current year because early in the year, it's hard to predict where revenues are going to land, and the band of outcomes is still pretty wide. So when we looked at that for this year, you know, last year's ratio was pretty high, and so we didn't feel that it was appropriate, especially as revenues, as we've said, are expected to be better.
Speaker Change: So couple of comments here one.
Speaker Change: Yes, the U S S. An election, its one of more than several dozen elections across the globe. So what I said the geopolitical forces are.
Speaker Change: Something that's on clients' minds and that they often look to a place like lazard to to help navigate them. We're seeing a lot of demand for insight into the combined geopolitical and business environment, because you can't make a business decision today without taking geopolitical forces into account.
Mary Ann Betsch: But there still is a lot of unpredictability in the year and also in our recruiting efforts. We're really excited about the trajectory there, but there's a cost to that as well. So we didn't think using last year's rate made sense, but we, as you said, moving towards our ratio was an important objective for this year, and we actually hope
Speaker Change: And those are very well positioned to help clients on exactly those sorts of those sorts of issues.
Speaker Change: With regards to the U S election, specifically.
Speaker Change: Honestly it there there's.
Speaker Change: Is there sort of are typically two parts to a client meeting the first part is the sort of.
Speaker Change: The the warm up in the second part is the meat of the meeting and the U S elections still is in the World section and typically not in the beta of the meeting section of.
Operator: That's great, Connor. Thank you.
Speaker Change: Client interactions.
Speaker Change: Great. Thank you.
Speaker Change: Thank you we have no further questions at this time.
Speaker Change: This does conclude Lazard first quarter 2024 earnings conference call. Thank you for your participation you may now disconnect.
Peter R. Orszag: And I guess for my follow-up, I wanted to touch on, you know, the asset management business. While trends in advisory look quite strong, outflows in the asset management segment have continued to accelerate despite your improved performance. I understand that it's still early days in terms of execution on your growth initiatives for the business, and it sounds like demand for your products is beginning to pick up. But when thinking about value creation for the franchise, I just wanted to get a sense as to how you're evaluating or thinking about the path forward. And would you consider strategic alternatives if the process of reinvigorating growth in the segment is taking longer than anticipated?
Speaker Change: Have a wonderful day.
Speaker Change: Yeah.
Speaker Change: [music].
Evan Lawrence Russo: Sure, let me take that, and then maybe Evan can add some additional color. First, let's just talk about what's happening in the business. We have a significant amount of very, very strong performance, and we can go into that in a bit, but with regard to the net outflows in the quarter, that was, I think, disproportionately driven by the phenomenon that I mentioned, which is that a higher-for-longer environment means there's more cash sitting on the sidelines, and so the inflows into active strategies like ours were depressed as a result.
Evan Lawrence Russo: That will reverse because we do expect that interest rates will be cut, and that will alter the flow of investment dollars, so there is a bit of a... Suey Generous effect, or a phenomenon associated with the hire for longer environment.
Speaker Change: Okay.
Speaker Change: Yeah.
Speaker Change: [music].
Speaker Change: Mhm.
Speaker Change: Hum.
Speaker Change: [music] Oh.
Peter R. Orszag: In terms of this underlying strategy, I think we're making a lot of progress on what I see as the three key areas. One is to continue to strengthen the core, and we gave you some examples of that with regard to the U.S. equities team. The second is to continue to evolve the distribution channel. I gave you an example of that with regard to Japan. And then the third is to continue to move into newer areas of opportunity for us in private markets and associated products, and an example of that is Alaya Partners. So there is progress that is occurring. I don't know if Evan you want to add anything to that, and then I can get back to the other part of the question in a second.
Speaker Change: Hum.
Speaker Change: [music].
Evan Lawrence Russo: I think at the end of the day, this quarter, as Peter said, the market environment, given the significantly higher yields on short-duration money markets, we start to see that at the beginning of the year. I think we'd expect that to continue through the middle of the year until central banks start to give more visibility on the lowering of rates. There's certainly a lot of money starting to sit on the sidelines. There's about $9 trillion, I think, the last estimate I saw of money sitting in money markets for short-duration.
Evan Lawrence Russo: And what we're hearing from allocators and from the investor community and our clients is that they just need higher conviction before putting new money to work. It's not a question of if; it's a question just of when and when the right timing is.
Peter R. Orszag: And so we're starting to see that. And that sort of flows through from retail to institutional. But we're starting to see a growing interest. As Peter mentioned before, in some of our strategies, globalization, so seeing more global strategies, specifically areas like Japan or others, which have been under-allocated asset classes in the past but are continuing to gain traction, certainly a lot of client interest in those under-allocated places such as EM and others, as well as an uptick in that we have across our quantum systematic platform. So a lot of good things are going on below the surface, but some of the macro trends, I think it's gonna take a little bit of time to work through before we see that. And then just,
Operator: And then just to, you know, round out the answer you asked about the strategic alternative question, as I hope you get the sense, we see a lot of upside potential in this business, and we also see significant synergies, synergies that can be built further out from outstanding content across the two businesses from our brand and from convening events that are, that, uh, share, and that are centered around that outstanding content. That having been said, we are a public company, and you know, we're always open to value-enhancing suggestions, but again, I'd go back to we see a significant amount of upside in both businesses, including that.
Brennan Hawken: Thank you all for taking my questions.
Operator: Thank you. We'll take our next question from Brennan Hawken with UBS. Your line is open.
Brennan Hawken: Good morning. Thanks for taking my questions.
Mary Ann Betsch: I'd like to drill into the non-comp a bit. This was a little better than expected this quarter. Is this the right building-off level for non-comp, or was there some noise that might have flattered the result this quarter? How should we be thinking about it this year?
Mary Ann Betsch: I'll take that one. So, we, as you know, have been working hard to identify and implement cost savings, and we're pleased with the results of those efforts. When you're looking, though, at kind of quarter-to-quarter seasonality, as you know, it tends to move around a bit, and if you're thinking about the rest of the year, I would kind of assume that the cost savings that we've achieved are going to be more or less offset by increases in things like occupancy costs and market data, we're kind of price takers, and then travel, which is increasing as client activity picks up, which is a good thing.
Mary Ann Betsch: So, there's kind of, you know, puts and takes there. But in the first quarter, we had a little bit of an excess benefit just based on the comparison to last year, where there were some sort of one-time pops.
Brennan Hawken: Okay, but was that because the comp was high, not necessarily because the bass in one, I'm just thinking about the bass in one cue, not necessarily the comp.
Mary Ann Betsch: No, sorry, what I meant was that if you're comparing non-cop year-over-year... The decline was partially reflecting the fact that last year there were some one-time items in there.
Brennan Hawken: Ah, okay, okay, great. Thanks for clarifying that.
Peter R. Orszag: And then you spoke, and you prepared remarks a bit about restructuring and the activity levels that you're seeing. Could you speak about where restructuring revenue as a proportion of advisory revenue has been coming from? Something we all used to get disclosed, but it would just be helpful to think about how much that has contributed to your advisory business in the past year or so, and particularly helpful given that the outlook remains pretty solid for them.
Brennan Hawken: Yeah, so Brennan, I think I'm going to give you some color but it may not fully satisfy. I'm used to that; it's okay, Peter.
Peter R. Orszag: First, I think, you know, when we say restructuring liability management, honestly, or frankly, it's mostly liability management in today's marketplace. And we did see a significant uptick relative to this time last year, which we believe will continue. You know, relative to the market, we were lagging a little bit at the beginning of last year. I think we have now.
Peter R. Orszag: Catching up or caught up in our rightful place in the marketplace that's been re-established. And so, I mean, as an example, the increase... For the first quarter, relative to the first quarter of last year, this quarter's restructuring liability management was over two times what it was in the first quarter of last year. We do expect that an elevated level of activity will continue as the debt maturities that are approaching interact with the hire for longer environment, and we feel like we are now very well positioned with a more diversified team that covers creditors and debtors and that has much more connectivity to private capital where a lot of activity is occurring to continue to be active. Frankly, even as interest rates come down, this will continue to be because of the maturity laws.
Operator: Okay, thanks for taking my questions.
James Edwin Yaro: Thank you. We'll take our next question from James Yaro of Goldman Sachs. Your line is open.
James Edwin Yaro: Good morning, and thanks for taking my questions. So we've seen industry M&A activity year-to-date improve substantially more in the U.S. than in Europe. I was hoping, Peter, you might be able to just provide your color on the dialogues and the differences between the U.S. and Europe.
Peter R. Orszag: Look, we did see, including in the first quarter, there was more of a pickup in North America than in Europe, although both are up. And that's generally the picture that we see for the year ahead, or for 2024 as a whole, which is a... [inaudible] One of the differentiators for Lazard is that we've got a strong presence, both in North America and in Europe. It provides a source of diversification, if you will, when there are different pockets of opportunity.
Peter R. Orszag: Last year, Europe was relatively strong for us. It is still a strong year for Europe, but North America, consistent with that market, I think we may be outpacing the market a bit, but consistent with the market, we're seeing a bit more strength in North America.
Mary Ann Betsch: Okay, I think that makes a lot of sense. Maybe just on the corporate revenue line, which did reach a record this quarter, any chance you could size the gain in that line just so we can model the sustainability, model sustainably that line item? And then any color on whether you do accrue comp and non-comp expenses against that line item?
Mary Ann Betsch: Yeah, so in terms of the gain, I would describe it as fairly sizable, but not a majority of the corporate revenue for the quarter. So if you're, you know, just thinking about kind of the run rate for the rest of the year, I would assume some return on our cash, plus or minus investment gains on the seed portfolio. So that's how I would think about that. And then, in terms of the comp ratio, we really do that for the firm as a whole, and it's not, you know, at this point in the year, not done on a person-by-person basis or, you know, kind of at that level of granularity.
Operator: Okay, that's very clear. Thanks so much.
Devin Patrick Ryan: Thank you. We'll take our next question from Devin Ryan with Citizens JMP. Your line is now open.
Devin Patrick Ryan: Thanks. Good morning, Peter, Mary Ann, and Evan.
Mary Ann Betsch: Thanks for taking the question. So, I want to just come back on the comp ratio as a follow-up and appreciate the color you guys provided there. And I also know that projecting revenues on a four-year basis at the beginning of the year is really tough. So, first quarter comp accrual, you know, maybe isn't a perfect science, but is there a level of revenue or a range of revenues we could think about that would be supportive of kind of driving that comp ratio or the overall margin profile back to the normalized range? Just trying to kind of think about that algorithm and what it looks like, given that maybe the first quarter is not the best way to judge it.
Mary Ann Betsch: I mean, I think, you know, as Brendan mentioned at the start of the call, we are still sort of dealing with the aftermath of the deferrals and the impact that that has on the current year. So that's definitely part of the equation.
Mary Ann Betsch: I think it's a question of how quickly we can get back into the target range, and the level of revenue certainly matters, but I don't think I would give you a magic number where I can foresee that we would hit 59.9%, right? I think there are a lot of inputs into it, and so we're trending towards it, but the pace is just going to depend on many factors, including how quickly the revenues recover
Operator: Okay. All right. That's fine. Thanks a lot.
Peter R. Orszag: And then a follow-up here, maybe for Peter, just on kind of broader trends within the M&A market. And, you know, we've been tracking more corporate activity really over the past year plus versus sponsors. I think Lazard's been well-positioned for that given its strong corporate relationships. It does seem like sponsors are gearing up to do more. And so I'd love to just kind of get some color from you around what you're seeing in that balance between corporates versus sponsors and the degree that sponsors are picking up behind the scenes and kind of what's maybe shifting the behavior or catalyst for them coming back to the market. Thanks. Sure.
Peter R. Orszag: I agree with your characterization, which is that to date, the strategics have been kind of leading the way. But I think we're now in the stage of the cycle where sponsors are coming back onto the playing field. So I think you've got the market characterization correct and that's what we're seeing in our own business, which is, you know, the share of our revenue that was coming from private capital declined over the last year or two as strategics were picking up more quickly than private capital was, but we are in the early stages of seeing that, yeah, the dialogues and the activity with sponsors are starting to accelerate.
Peter R. Orszag: One thing that I would highlight is, perhaps unappreciated, how much Lazard has been strengthening our connectivity to private capital over the past couple of years so that we are positioned for this shift as it occurs.
Peter R. Orszag: And that's not just in private equity, but it's across the whole array of what these now large alternative asset managers are focused on. So private credit, fundraising, restructuring, and liability management, as I mentioned. And then, yes, private equity and sponsor coverage. We've been investing in all those areas. And so your historical perception of Lazard may need to evolve a little bit because of the investments that we've been making. And I will tell you that several of the very large alternative asset managers have remarked on how much our coverage has improved and how much expanded connectivity they are seeing between Lazard and their firm.
Operator: All right, thank you very much. Thank you. We'll take our next question from Ryan Kenny with Morgan Stanley. Your line is open. Hi, good morning. Thanks for taking my question.
Ryan Michael Kenny: Thank you. We'll take our next question from Ryan Kenny with Morgan Stanley. Your line is open. Hi, good morning. Thanks for taking my question.
Peter R. Orszag: So, a couple of comments here. One, yes, the U.S. has an election. It's one of more than several dozen elections across the globe. So, when I said that geopolitical forces are Something that's on clients' minds and that they often look to a place like Lazard to help them navigate, we're seeing a lot of demand for insight into the combined geopolitical and business environment because you can't make a business decision today without... taking geopolitical forces into account, and Lazard is With regard to the U.S. election specifically, Honestly, there's...
Peter R. Orszag: There are typically two parts to a client meeting. The first part is the warm-up, and the second part is the meat of the meeting. The U.S. election is still in the warm-up section and typically not in the meat of the meeting section of client meetings.
Operator: Great, thank you. Thank you. We have no further questions at this time. This does conclude Lazard's first quarter 2024 earnings conference call. Thank you for your participation. You may now disconnect. And have a wonderful day.
Operator: Thank you. We have no further questions at this time. This does conclude Lazard's first quarter 2024 earnings conference call. Thank you for your participation. You may now disconnect. And have a wonderful day.
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