Earnings Call Transcript - LAZ Q2 2020

Operator, Operator

Good morning and welcome to Lazard’s Second Quarter and First Half Earnings 2020 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. At this time, I will turn the call over to Alexandra Deignan, Lazard’s Head of Investor Relations. Please go ahead.

Alexandra Deignan, Head of Investor Relations

Good morning. Thank you. Welcome to Lazard’s earnings call for the second quarter and first half of 2020. I am Alexandra Deignan, the Company’s Head of Investor Relations. In addition to today’s audio comments, we posted our earnings release and investor presentation, which you can access on our website. A replay of this call will also be available on our website later today. Before we begin, let me remind you that we may make forward-looking statements about our business and performance. There are important factors that could cause our actual results, level of activity, performance or achievements to differ 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. Lazard assumes no responsibility for the accuracy or completeness of these forward-looking statements and assumes no duty to update these forward-looking statements. Today’s discussion also includes certain non-GAAP financial measures that we believe are meaningful when evaluating the Company’s performance. A reconciliation of these non-GAAP financial measures to the comparable GAAP measures is provided in our earnings release and investor presentation. Hosting our call today are Kenneth Jacobs, Lazard’s Chairman and Chief Executive Officer; and Evan Russo, Chief Financial Officer. They will provide opening remarks, and then we will open the call to questions. I’ll now turn the call over to Ken.

Kenneth Jacobs, Chairman and CEO

Thank you. Good morning. Our second quarter and first half results reflect steady operating performance across our business in an uncertain environment. Financial advisory results for the second quarter highlighted the breadth of our advisory services. As we expected, the pace of M&A completions and announcements declined in line with the market. However, strategic discussions with clients are increasingly constructive, especially in Europe as countries ease their lockdown restrictions. A strong quarter of restructuring and capital markets advisory largely offset slower M&A activity as we serve clients with immediate liquidity issues caused by the pandemic’s economic shock. We advised on a number of the largest assignments in the U.S. energy and retail sectors. We have also completed the successful restructuring of PG&E, the largest utility bankruptcy in U.S. history. For the first half of the year, Lazard was the global leader in announced restructuring assignments by dollar volume. We are serving clients with expertise built over decades and through cycles in capital structure, capital raising debt negotiations, restructuring and exchange offers, all supported by our global platform and industry sector teams. Our sovereign advisory practice has also seen a significant increase in activity. We were advising countries in Latin America, Africa, and the Middle East on debt restructuring, and we continue to advise governments in developed economies on programs to support the private sector. In asset management, our platforms benefited from the rebound in global capital markets during the second quarter. Our assets under management increased 11% from the first quarter. While we experienced some outflows for the quarter, gross inflows were strong. Our quantitative strategies continued to gain traction, as did our convertible and international equity strategies. We continue to invest in the growth of asset management through the development and scaling up of new and existing platforms. Recently, we announced the launch of U.S. and global sustainable equity strategies, which are receiving strong demand. Our sustainable equity strategies are built on the foundation of our long-standing efforts in ESG integration, where we have a unique sector-based approach to materiality assessment. We see significant opportunity for Lazard in this space and are committed to further deepening our ESG research capabilities and investment solutions for clients. Before I turn the call over to Evan, I want to comment on the evolution of Lazard’s day-to-day operations during the pandemic. At the time of our last earnings call, virtually all of our people were working from home in response to the global health crisis. Since then, many of our employees have returned to the office with guidelines to maintain social distancing. We have adapted quickly to a hybrid environment with a number of our people in the office and others at home. A silver lining to this experience has been the improvements in efficiencies, internal communications, and other positive cultural changes that might otherwise have taken years to accomplish. As we move forward, we are taking steps to ensure that we lock in these improvements for the benefit of all our stakeholders. Once again, I want to thank our people for their resiliency and commitment to upholding Lazard’s standards of excellence even in the most challenging conditions. Evan will now provide more color on our second quarter and first half results, then I will comment on our outlook.

Evan Russo, CFO

Thank you, Ken. Our second quarter results reflect the breadth and diversity of our business in a challenging market environment. Financial advisory second quarter operating revenue of $293 million was down 11% from last year, but was about even with the first quarter of this year. As we expected, M&A revenue decreased compared to last year’s second quarter. However, restructuring revenue increased sharply based on new activity and the closing of several large assignments. Asset Management operating revenue of $245 million declined 9% from this year's first quarter, reflecting lower average assets under management in the second quarter, following the broad market sell-off in the first quarter. Average AuM for the second quarter was $208 billion, 6% lower than the first quarter of this year and 12% lower than a year ago. We finished the second quarter with AuM at $215 billion, 11% higher than the start of the quarter. The increase was primarily driven by market appreciation and positive foreign exchange movement with $6 billion of net outflows. The quarter’s net outflows were driven primarily by emerging markets and multi-regional equities. These were partly offset by net inflows in our global and multi-regional fixed income strategies. As of July 29, our AuM was approximately $224 billion, reflecting market appreciation of $6.5 billion during the month, positive foreign exchange movement of $4.3 billion, and net outflows of approximately $1 billion. Looking ahead across our franchise, in Financial Advisory, we continue to expect a subdued third quarter based on the pause in M&A activity during the first half of the year, with more normalized levels of activity expected in the fourth quarter and into 2021. In asset management, we are seeing a high level of investor interest and winning significant mandates across our multi-regional, global, and emerging markets platforms. And we are seeing demand for both our quantitative and fundamental products across our platforms. Turning to expenses, in the second quarter, we accrued compensation expense at a 60% adjusted compensation ratio, compared to 57.5% in the second quarter of last year. Our full-year compensation expectations will develop through the year based on revenues and business mix. Non-compensation expenses of $100 million were 22% lower than the same period last year, primarily reflecting lower travel and business development costs. Our adjusted non-compensation ratio for the second quarter was 18.3% compared to 20.3% in the second quarter of last year. Our effective tax rate in the second quarter as adjusted was 23.9%. Our effective tax rate for the first half of the year was 26.3%. We expect an annual effective tax rate for this year in the low-to-mid 20% range. In regards to capital allocation, our business continues to generate significant free cash flow, which supports our objective of returning capital to shareholders. In the second quarter, we returned $53 million of capital to investors, primarily through dividends. This week, we declared a quarterly dividend on our common stock of $0.47 per share. Lazard’s financial position remains strong with ample liquidity and balance sheet flexibility. As of June 30, our cash and cash equivalents were $897 million, up from $793 million at the start of the quarter. Ken will now conclude our remarks.

Kenneth Jacobs, Chairman and CEO

Thank you, Evan. I will provide some perspective on our outlook and then we'll open the call to questions. The global macroeconomic environment has improved since our last earnings call but remains uncertain. Central Bank interventions have helped to stabilize capital markets. Fiscal measures in the U.S. and Europe were partly offset by an unprecedented drop in aggregate demand. However, the shape and pace of the recovery depend in large part on the course of the pandemic and on additional governmental stimulus which remains unpredictable. In financial advisory, we expect to see increasing M&A activity as the year progresses. Client dialogues are improving in both the U.S. and Europe. We also expect to see increased restructuring activity in Europe as Central Bank and governments scale back their economic support programs. In Asset Management, Central Bank support has helped stabilize asset prices; that volatility is likely to remain elevated. We expected the massive dislocation in markets and dispersion of returns resulting from the pandemic should create stronger demand for active management. This combined with stronger investor emphasis on sustainability positions us well for the long-term. Regardless of the pace of economic recovery, Lazard is well-positioned to weather this period of uncertainty with a diversified business model, a global client base, and unrivaled expertise in strategic advisory, restructuring, and asset management solutions. Our business model is highly cash generative and has proven its strength and resilience across numerous business cycles. We remain focused on serving our clients well while we manage the firm for profitable growth and shareholder value over the long term. Now let's open the call to questions. Thank you.

Operator, Operator

Thank you, sir. We will take our first question from Devin Ryan from JMP Securities. Please go ahead.

Devin Ryan, Analyst

Hey, Great. Thanks. Good morning, everyone.

Kenneth Jacobs, Chairman and CEO

Hey, good morning, Devin.

Devin Ryan, Analyst

Maybe start off the question just on the restructuring strength. So you've seen honestly a very strong ramp in deals and we can track some of that from the outside. We’re trying to get a little bit better sense from kind of the sizing and timing perspective and then how you guys are thinking about the opportunity there. If we look back, you used to provide some of the detail around the revenues. I think the prior high was about $375 million back in 2009. From the outside, it does seem like you're tracking ahead of that. So, I just wanted to get some more perspective around kind of how you're thinking about the upside case or just even what you are seeing in that business today. And then also, just from the timing perspective, you have a view of it does take longer to close restructuring, typically, but we are seeing, I think some deals closing this year. So just trying to think about the glide path between 2020 and 2021.

Kenneth Jacobs, Chairman and CEO

Sure, I'll give you the overall themes in restructuring and has Evan talked a little bit about the scale and timing of some of the closings. Okay. So look first, our franchise in restructuring is really quite powerful. It's been through several cycles. It integrates not only a very strong market-leading team in restructuring but it also is able to draw from the rest of the firm both the industry groups and geographies to complement activities in the restructuring group. And that's been one of the secrets to our success and our ability to ramp up in this area over the course of time. In terms of this cycle, we saw very strong activity in the first part of this year, largely driven by companies which already were facing challenged liquidity positions in balance sheets prior to the pandemic that were accelerated by the pandemic. There's a bit of a lull right now. But our sense is that given the withdrawal of some of the stimulus activities, an unevenness of the recovery, particularly in the U.S., because of the breadth of the pandemic in the south and west, and now into the Midwest and the likely pullback on some economic activity that was generated in those states, when they reopened, we're likely to see a pickup into the Fall and Winter this year. So overall, the activity levels we think are going to be historic in that regard and probably continue through next year. Evan you want to just go into some more detail there.

Evan Russo, CFO

Sure. Happy to Devin. So when we think about the restructuring pipeline output for the rest of the year. So as we said, we had a very strong Q2, some of that was closing restructurings we're working on from the beginning of the year that closed in the second quarter of this year. I think the significant activity that we picked up new mandates towards the end of Q1 into Q2 really plays out over the course of the next three quarters. So it's really Q3, Q4, and then Q1 of next year. I think that's generally the timeline that you have to look at. I'd say predominantly, you'd probably have a bigger skew towards Q4 than Q3 in that business at this point in time. But this is all very fluid. These transactions can move very quickly. And in many cases, they've moved faster even through the bankruptcy processes than one might have done historically. So timing is a little different. I think this time around from what it was last time around. You're seeing active restructuring assignments closed quickly in the context of liability management and other types of financing solutions that are going on. And then the sort of bankruptcy longer-term restructuring cycle, some of them are going a little bit quicker, some of them will go a little bit slower. So I think you're going to see it play out over the next two to three quarters. I think every transaction is kind of different. There isn't much of the same. I'd say in terms of the scale and size. I think as you talked about, the last, as Ken mentioned, this could be a very big cycle. I mean, it's still in the early phases of knowing how that's going to play out. I think we certainly have a very strong belief in the business right now. And certainly what we saw and the level of activity that started at the end of Q1 into Q2 of this year. As we've said, for our business, historically, restructuring revenues as a percentage of the total financial advisory could range anywhere from 10% to 40% plus in some of the real deep recession and heavy type of restructuring scenarios and I think we're certainly gearing more at least this year and a little too early to know for next year, but certainly looks like it could build into that sort of higher end of those ranges for the next year, year and a half.

Devin Ryan, Analyst

Terrific, color. Thank you guys. And then just a follow-up, dig in a little bit more on some of the M&A commentary and really the question is around just the tone and what you guys are seeing and I’d appreciate, there's a lot of uncertainty. So it's hard to be and maybe completely confident of what the future holds here. But we've been hearing a little bit of a different commentary across earnings calls here, this season where I think some companies are maybe a little more cautious, some are feeling better, and it does seem like firms with global platforms and maybe they're levered to some of the larger companies seem to have a little bit more positive outlook than U.S. markets or smaller deals. And so I'm curious, the outlook and how you would frame kind of maybe between whether it's global, Europe, U.S. in a large transaction, small transactions, financial sponsors just a little more flavor there. It does feel like we're hearing maybe some different outlooks from some companies.

Kenneth Jacobs, Chairman and CEO

There are many factors at play and inconsistencies across different regions, industries, and transaction sizes, making it difficult to identify an overall trend. However, it seems that discussions have increased since the end of the first quarter. These conversations are more positive, indicating a greater chance of activity occurring. Financing for deals has improved, especially for sponsor deals; while it's not back to previous levels, more financing is becoming available, and some terms are starting to resemble what we've seen before. The sectors that we believe will be most active are those least affected by the pandemic, such as technology and biopharma. In these sectors, we've noticed an uptick in discussions. Conversely, sectors like travel, leisure, and retail have seen little M&A dialogue; while we might observe some distressed M&A conversations as the year progresses, regular dialogue is minimal. Regarding sponsor and sell-side activity, which we often monitor as an indicator of market dynamics, the smaller mid-sized transactions are starting to show signs of improvement in both Europe and the U.S. In Europe, the recovery appears to be more generalized across various sectors, reflecting a more consistent reopening across the continent. In the U.S., sell-side engagements that were delayed during the pandemic, especially in the previously mentioned sectors, are beginning to restart, with some nearing completion. Additionally, a number of new transactions are beginning to emerge. Overall, while there are still many challenges, the situation appears more favorable than it did a quarter ago. For larger transactions, the activity remains sporadic, likely influenced by the sectors that were less impacted by the pandemic.

Devin Ryan, Analyst

Okay, terrific. Well, thanks for taking my questions. I'll hop back in the queue.

Operator, Operator

Thank you. We take our next question from Brennan Hawken from UBS Group. Please go ahead.

Brennan Hawken, Analyst

Good morning. Thanks for taking my questions. I’d actually like to follow up on some of those comments from Devin’s question. Ken, you gave a little color on some of the differences between Europe and the U.S. in the small deal market? But when we look at the broad market, which is much more impacted by big deals, we’ve seen and I think you made some reference to it in your opening remarks in the call Ken less bad trends on announcements, right? I mean, the market is definitely down and soft for me. But it looks like Europe is hanging in better. Can you please talk about what you're seeing there, what sort of early trends you're seeing? How sustainable you think that divergence might be? And how we should think about it in the medium term based on what you're seeing so far?

Kenneth Jacobs, Chairman and CEO

Sure. It's still early to draw broad conclusions from just a few weeks or months of activity. However, the outlook in Europe seems more stable than in the U.S. Specifically, Continental Europe has managed the pandemic and emerged from confinement better than the U.S. As a result, the recovery in Europe has been more consistent, unlike the interruptions seen in the U.S. This means that CEOs and decision-makers in Europe may feel more confident about predicting future economic conditions. Nonetheless, there is still significant uncertainty globally. Economically, while both regions suffered greatly from the pandemic, Europe is seeing lower unemployment rates, and many workers and consumers have retained their savings, which helps stimulate economic activity. In contrast, the U.S. faces a different scenario with higher unemployment and a less uniform pandemic experience, leading to more varied economic activity as we approach Fall and Winter. It's essential to remain cautious, as conditions could deteriorate in Europe, similar to what we've observed in parts of Asia. Concerning deal activity, three key factors come into play. Equity valuations are high but inconsistent across sectors like technology and biopharma, with certain areas seeing a lack of rebound. While financing conditions for long-term business needs have improved due to Central Bank support, the overall deal market still has not returned to previous levels. Lastly, confidence is crucial; having some assurance about the economic outlook, even if it’s not overly positive, is necessary. Some industries are still struggling with this, while others have shown improvement, which could lead to increased deal activity in those more stable environments.

Brennan Hawken, Analyst

Thank you for your insights, Ken. I have a follow-up question regarding the French Government's recent dividend restrictions for companies. Will this affect the dividends from your subsidiary to the parent company, or is the restriction only applicable to public shareholders? If it is indeed a restriction, do you believe it will have an impact, or is it something that can be managed?

Kenneth Jacobs, Chairman and CEO

It has no impact on us.

Brennan Hawken, Analyst

Thank you. That's simple enough.

Operator, Operator

Thank you. And now we will take our next question from Gautam Sawant from Credit Suisse. Please go ahead.

Gautam Sawant, Analyst

Hey, good morning. I wanted to know how has the economic backdrop and pressure on M&A revenues impacted competition in the marketplace for talent? Are you seeing there's an opportunity to achieve senior bankers? And are there any specific industries that you're focused on?

Kenneth Jacobs, Chairman and CEO

The second quarter was a relatively good period for us in terms of hiring, as we brought on five or six new employees during that time. However, it's still early to make conclusive assessments. These hires were either opportunistic or in the pipeline already. Generally, it takes time, usually until the year-end, to gain a clearer understanding of the talent market. Given the fluctuations we're currently experiencing, many are still quite distant from that clarity. I anticipate that by year-end, depending on the performance of various companies, both large and small, we will have a much better sense of the talent landscape.

Gautam Sawant, Analyst

Thank you.

Operator, Operator

Thank you. Now we’ll take your next question from Jeff Harte from Piper Sandler. Please go ahead.

Jeff Harte, Analyst

Hi, good morning, guys. A couple for me one, on the kind of Capital Markets Advisory, Could you remind us how big a business that is for you guys? And give us some kind of indication of how strong the quarter was in that business? And I guess I'm kind of thinking of it from the perspective of it was a really good quarter for public debt and equity underwriting to that kind of flow over into the Capital Markets Advisory?

Kenneth Jacobs, Chairman and CEO

Evan, you will take that?

Evan Russo, CFO

Yes, sure. So, well, Capital Markets Advisory, as we put it all together. It's sort of one advisory business as you say, we don't call out the specific components. And the reason for that has to do with the fact that Capital Markets Advisory in many cases can be linked to restructuring type of work. It can be linked to regular M&A type of work and others. And so this was a quarter where we were helping lots of companies think about their financing strategy, think about their financial strategy in conjunction with their strategic activity or strategic ambitions, as well as helping them with liquidity in many cases as part of a restructuring mandate or and thinking about it in the context of overall capital structure advisory. So it's a hard sort of thing to pinpoint. But certainly there was a lot of activity relating to advising companies this quarter around their financing needs and the ability for them to take advantage of what was certainly on a global basis very active underwriting very active capital markets, primary issuance across all different types of products. And so a lot of our time is spent with clients on those things. I would say it's not, we don't break it out specifically because it's really part of so many different types of discussions that we're having in so many different types of situations.

Jeff Harte, Analyst

Okay, it didn't work from home kind of travel restrictions. How is a kind of a lack of face-to-face activity impacting the ability of the more strategic advisory to move from conversations to actual announcements. So kind of in general, but I'd be interested in North America versus outside of North America if there's any differences.

Kenneth Jacobs, Chairman and CEO

Sure. It's interesting that in most parts of the continent, activities and behavior have returned to pre-confinement levels; people are generally back in the office and in-person meetings are taking place in many areas. In the U.S. and U.K., however, people are still working under confinement measures, with most activities continuing to take place over video. We have not seen a significant amount of M&A activity in the market since the pandemic began, although deals are happening. We have virtual processes underway, and we expect this may become the new normal for the next year or so. We were initially skeptical about the ability to manage complex restructurings effectively through video, considering the time pressure and the number of people involved, as well as court proceedings. However, these processes have proceeded smoothly using video, indicating an adjustment in how work is done, even if some tasks may still be more challenging in this format.

Jeff Harte, Analyst

Okay, finally, with a nearly 7% common dividend yield, we get asked a lot about the sustainability of that dividend. Looking at cash on balance sheet and operating cash flows, I mean, they remain quite strong. So they kind of sit on the outside, I mean, how bad of an environment we have to get into realistically before you'd expect maybe the dividend kind of payments to come into question.

Kenneth Jacobs, Chairman and CEO

Evan.

Evan Russo, CFO

Yes, sure. We have built a significant amount of cash, with an increase of over $100 million from the end of last quarter, bringing our total cash to approximately $900 million at the end of the quarter. From a cash and balance sheet perspective, we are in a strong position at this time. As mentioned last quarter, our dividend is a crucial part of our capital management strategy, aligning with our policy to return excess cash to shareholders, and we expect to continue this practice. However, we will remain cautious about the current environment and the uncertainty in our business outlook. For now, we are comfortable with the dividend we announced this week.

Jeff Harte, Analyst

Okay, thank you.

Operator, Operator

Thank you. We will now take our next question from Richard Ramsden from Goldman Sachs. Please go ahead.

Richard Ramsden, Analyst

Hi, good morning, everyone. I just wanted to ask a little bit about the non-comp expenses and the non-comp ratio. Obviously appreciate, is probably down to close to zero. But in your comments, you talk about the fact that you do think that some of these improvements in terms of people working more efficiently and working from home may stick, so can you just talk a little bit about how you think that could lead through into long-term improvements in the non-compensation or the time or is it too soon to conclude on that?

Kenneth Jacobs, Chairman and CEO

Sure, Evan, would you like to address this?

Evan Russo, CFO

Yes, it's a great question. You're likely correct in noting that it's too soon to determine the longer-term effects. In the short term, as you mentioned, travel this quarter was nearly non-existent, which led to significant benefits related to travel and entertainment in our marketing and business development expenses, resulting in low non-compensation for this quarter. For the second half of the year, as Ken outlined earlier regarding increased activity levels, we anticipate continued improvements in marketing and business development, leading to higher figures in those areas as we approach more normalized levels. This will likely be more pronounced in the fourth quarter than the third, considering we are already a month in and still facing uncertainty in the current environment, which remains below our historical averages. As for the long term, we aim to leverage the lessons learned from the pandemic, including enhanced technology use, altered client interaction patterns, and more efficient ways of engaging with clients, which could help reduce non-compensation impacts over time. However, it's still early to draw definitive conclusions, but we intend to carry forward the insights gained today into the post-COVID landscape. We expect more discussions on this topic in the upcoming quarters.

Richard Ramsden, Analyst

Okay, thanks. And then as a follow-up. Can you just talk a little bit about financial sponsor activity, how that's evolved over the course of the quarter? And how active you think that could be as we head into the second half of the year in terms of the driver activity?

Kenneth Jacobs, Chairman and CEO

Sure. So clearly, the activity level of international sponsors is improving as the year progresses. As the financing markets improve for deals and for those kinds of sponsor deals, we should see an improvement activity there as the year progresses. The frankly, the area that we're really intrigued by is public to privates right now. There just seems to be increasing likelihood that we're going to see a pickup of activity there, both in the U.S. and in the U.K. And that's something we're keeping an eye on.

Richard Ramsden, Analyst

Okay, thanks very much.

Operator, Operator

Thank you. And now we'll take our next question from Manan Gosalia from Morgan Stanley. Please go ahead.

Manan Gosalia, Analyst

Hi, good morning. Can you discuss the conversations you're having regarding deals that are already in the pipeline as we face this downturn? What percentage of completions in the second quarter were related to deals that were in the pipeline before COVID? I'm also interested in those deals that have been put on hold. Can you share how engaged your clients are? Are they eager to finalize something as soon as travel resumes and we gain more certainty in the environment? Essentially, I'm trying to understand the potential rebound effect on deal closings once conditions improve.

Kenneth Jacobs, Chairman and CEO

In the second quarter, most activity that closed was likely connected to deals that began last year. New developments in M&A typically take longer to materialize. Currently, we're observing a mix of two factors. One is that while there's not a widespread trend, several processes that were delayed due to the pandemic are now moving forward, and we anticipate reaching completion soon. This is largely due to the financing markets becoming more accessible and a slight increase in confidence regarding the future, although it’s not complete confidence. Additionally, we’re seeing new processes initiate over the past few weeks that were not anticipated before the pandemic. These are fresh assignments that are starting now. What will be interesting is how conversations pick up speed and how quickly new discussions begin. My concerns are less about virtual due diligence and more about the unpredictability of the economic outcomes. It’s more about having certainty in projecting the future for businesses and industries that will influence these conversations, rather than the practicality of traveling or having virtual discussions. Ultimately, it’s about having confidence in the economic outlook.

Manan Gosalia, Analyst

Got it. And then on the asset management side, last quarter, you mentioned that you were surprised by the level of RSP activity that you're seeing. And you also said earlier on the call that you're seeing some strong growth and flows. Can you talk a little bit about how you think that should impact that goes to the rest of the year?

Kenneth Jacobs, Chairman and CEO

It's somewhat unpredictable on the institutional side due to the actual funding of mandates, but the current level of unfunded mandates is historically high for us, which is encouraging. The exact timing of when they will fund is less certain. The demand for some of our newer products in sustainable areas and quantitative global products is also encouraging. Overall, the outlook feels positive. However, we continue to face some outflows in our emerging market products, a trend we've been experiencing for some time. On the other hand, there appears to be increasing demand for many of our offerings right now.

Manan Gosalia, Analyst

Great. Thank you.

Operator, Operator

It appears there are no further questions at this time. This now concludes the Lazard conference. Thank you.

Kenneth Jacobs, Chairman and CEO

Thank you.