Lazard Beats Estimates on Advisory, Asset ManagementLaura Marcinek
Lazard Ltd., the largest independent merger-advisory firm, said third-quarter profit rose 81 percent, beating analysts’ estimates, as revenue from asset management and advising on deals increased.
Net income climbed to $60.3 million, or 45 cents a share, from $33.3 million, or 26 cents, a year earlier, the Hamilton, Bermuda-based firm said today in a statement. Earnings excluding some items were 46 cents a share, surpassing the 36-cent average estimate of 12 analysts surveyed by Bloomberg.
Merger-and-acquisition volume increased globally in the second and third quarters from the first three months of the year, according to data compiled by Bloomberg. An improving economy, rising stock prices and cheap financing could boost dealmaking, Chief Executive Officer Ken Jacobs said last month at the Bloomberg Markets 50 Summit.
“I think we’re starting to see a real improvement in the macroeconomic environment both here in the U.S. and starting to see some seeds of it in Europe as well,” Jacobs said today in an interview following the results. “If that continues, that augurs well for M&A picking up.”
Lazard rose 4 percent to $39.19 at 10:04 a.m. in New York trading, the biggest jump in almost a month.
Revenue from advising clients climbed 6.3 percent to $233.8 million in the third quarter from a year earlier. That was bolstered by “better than expected” restructuring advisory fees, which increased 23 percent to $42.2 million, Jacobs said today in the interview. Asset-management revenue rose 13 percent to $248 million, according to the statement.
“We’ve obviously benefited from the improvement in the markets,” Jacobs said. The Standard & Poor’s 500 Index gained 4.7 percent in the third quarter, capping an 18 percent rise for the first nine months of the year.
Advisory revenue for the first three quarters of 2013 declined 10 percent to $666 million after Lazard booked more fees in the fourth quarter of 2012, causing first-quarter revenue to drop, Jacobs said.
Lazard set aside $293 million, or 60 percent of revenue, for compensation in the third quarter, compared with $278 million, or 63 percent, a year earlier.
The firm has about $1.09 billion in outstanding debt coming due in 2015 and 2017, according to data compiled by Bloomberg. Jacobs said on a conference call following results that the company is deciding the proper mix between refinancing some of that debt and paying some off.
“It’s a relatively attractive environment to refinance,” Jacobs said. “For us it’s about balance between the attractiveness of the refinancing, our view on rates, the world’s view on rates, and what kind of premium we have to pay to refinance the debt or pay it down.”
Evercore Partners Inc., the investment bank founded by former U.S. Deputy Treasury Secretary Roger Altman, said yesterday that third-quarter profit more than doubled as advisory revenue increased. Evercore shares climbed as much as 8.5 percent in New York today, the most in a year.
Greenhill & Co., the advisory firm founded by Robert Greenhill, said last week net income dropped 79 percent to $1.8 million. CEO Scott Bok said at the time that he expects full-year advisory revenue to increase slightly from 2012.