Good morning, and welcome to Lazard's First Quarter 2015 Earnings Conference Call. This call is being recorded. At this time, all participants are in a listen only mode. [Operator Instructions] At this time, I'd like to turn the call over to Judi Frost Mackey, Lazard's Managing Director of Global Communications. Please go ma'am.

Good morning and thank you for joining our conference call to review Lazard's results for the first quarter 2015. Hosting the call today are Kenneth Jacobs, Lazard's Chairman and Chief Executive Officer; and Matthieu Bucaille, Chief Financial Officer. A replay of this call will be available on the Lazard website beginning today by 10 AM Eastern Time. Today's call may contain forward-looking statements. These statements are based on our current expectations about future events and are subject to known and unknown risks, uncertainties and assumptions. 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. These factors include but are not limited to those discussed in Lazard's filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K, quarterly report on Form 10-Q and current report on Form 8-K. Lazard assumes no responsibility for the accuracy or completeness of any of these forward-looking statements. Investors should not rely upon forward-looking statements as predictions of future events. Lazard is under no duty to update any of these forward-looking statements after the date on which they are made. Today's discussion may include certain non-GAAP financial measures. A description of these non-GAAP financial measures and the reconciliation to the comparable GAAP measure are contained in our earnings release, which has been issued this morning. For today's call, we'll focus on highlights of our performance. The details of our earnings can be found in our press release issued this morning and in our investor presentation, both of which are posted on our website. Following their remarks, Ken and Matthieu will be happy to answer your questions. I will now turn the call over to our Chairman and Chief Executive, Ken Jacobs.

Good morning. Lazard continues to generate strong results for clients and shareholders. We achieved record first quarter operating revenue of $581 million with record first quarters to both our business group. As we said before we don't read too much into one quarter but the long-term growth trend is strong. On an LTM basis, Lazard's operating revenue is increased for eight consecutive quarters. We've achieved this in a macro economic environment that continues to be uneven. Our steady growth underscores that all of our business model, the breadth and depth of our global franchise and the value we create for clients. In Financial Advisory operating revenue reflected growth across the business with solid performance in M&A, sovereign and capital advisory. We continue to be leader in a large, strategic, complex and multinational transaction that characterize the current M&A cycle. For the first quarter, approximately half of our announced transactions were cross border. We are advising on almost a third of global announced transaction valued at $10 billion and over. And we are the sole advisor to H J Heinz on its combination with Kraft Foods, the largest transaction of the quarter. In Sovereign Advisory, we continue advice on some of the world's most high profile and demanding assignments including those in Greece, Ukraine and Egypt. And our Capital Advisory business is active especially in Europe where we advise on some of the quarter's most prominent IPOs and capital raises as well as balance sheet restructure. In Asset Management, operating revenue growth reflected the strength and diversity of our investment platforms. We generated record first quarter management fee despite capital markets and foreign exchange volatility. We achieved net inflows of $1 billion driven by a broad range of equity and fixed income strategies. We are seeing steady investor demand across our platforms especially for global, multiregional and emerging market strategies. Asset Management continues to have solid fundamentals. With leadership in growing asset classes. Two of our funds received Lipper Awards for their consistent risk adjusted performance. And we continue to have significant capacity for organic growth across our asset management platforms. Matthieu will now provide color on our financial results and capital management.

Thank you, Ken. Lazard's operating revenue increased 8% in the first quarter while adjusted net income increased 27% demonstrating the significant operating leverage of our business lift. The strengthening US dollar had an impact on our revenues and because a large portion of our cost is denominated in foreign currency the impact of profitability was not material. Revenue growth reflected trends across the franchise. Financial Advisory's record first quarter operating revenue was driven primarily by 9% increase in M&A and other advisory. Asset Management's record first quarter operating revenue included a 5% increase in management fees. On a sequential basis management fees decreased 3% from the first quarter of 2014. In a first quarter of this year, AUM increased approximately 1% on sequential basis. Increase was driven by net influence of $1 billion, market appreciations of $8.9 billion offset by foreign exchange depreciation of $7.9 billion. First quarter net inflows were driven primarily by new mandate in our multiregional and fixed income platform. As of April 17, our AUM was $205 billion, a $6 billion increase since March 31. The increase was driven by market appreciation of $4.3 billion. Foreign exchange appreciation of $1 billion, net inflows of $0.7 billion. Turning to expenses. We are accruing compensation at 55.6% adjusted compensation ratio consistent with our full year 2014 ratio. This compares to 58.8% ratio in the first quarter of last year. Our adjusted non compensation ratio for the first quarter was 18.3% compared to 19.1% in the first quarter of last year. Non compensation expenses increased 3% and operating revenue grew 8%. Finally, regarding Capital Management. In February, we refinance a portion of Lazard group's outstanding debt in order to reduce both our total annual interest expense and our total debt level. As a result of the refinancing, we expect interest expense savings of approximately $14 million in 2015. In a first quarter we returned $343 million to shareholders primarily through dividends and share repurchases. In line with our capital management objectives, we've already repurchased enough shares to offset more than half of the pension dilution from 2014 year end equity grant. With increased profitability Lazard continues to generate substantial cash and we are increasing our quarterly dividend by 17% to $0.35 per share. Ken will now conclude our remarks.

Thank you, Matthieu. A few words on our outlook before we open the call to questions. We have maintained for sometime that we are cautiously optimistic. The US macro economic environment continues to strengthen. But Europe and many of the developing markets remain unsettle. Capital markets may continue to be volatile this year. As always we are focused on a long term. We've build the solid platform for profitable growth and Lazard is an excellent position going forward. We've an unrivaled global network of relationships with key decision makers in business, government and investing institutions. The breadth and depth of our senior level expertise is a powerful competitive advantage. As the only advisory focused firm with global scale, we are leaders in large, strategic and cross border assignments. Asset Management is a world class franchise with broadly diversified strategy and global client base. And both our businesses have operating leverage with significant capacity for increased activity and organic growth. Now let's open the call for questions. Thank you.

[Operator Instructions] And we have a question from Ashley Serrao with Crédit Suisse.

Yes, good morning. This is Markus Kerney filling in Ashley Serrao. Congratulation on a quarter. So question on Europe. QE is beginning to list asset prices in Europe? When you talk to CEOs in the region, what are you hearing and conversely what are you hearing from non-European CEOs as far as taking advantage of the weakening euro?

Look, QE is in a positive from the standpoint of obviously the cost of financing and valuation in Europe. And generally speaking the European economic outlook has improved mildly overall since before QE, generally speaking I would say our sense is that confidence is improving at the decision maker level in Europe CEOs.

Perfect, thank you. And moving to asset management. Wanted to drill down into the multiregional product. It has been a bright area for you. Can you give us a sense of where the demand you are seeing is coming from? And then an update on plans to grow the fixed income side of the house.

Generally speaking as you said it was a good area for us, demand is coming from primarily from the US. It is just kind of right time right place with product right now. And on the fixed income side, we continue to do well in the emerging market, get product and the performance on range of income products has been strong now for a quite some time.

And we will go next to Alex Blostein with Goldman Sachs.

Great, good morning, everyone. Question on the M&A backdrop. So it sounds like we are one quarter into 2015 and the market continues to be dominated by larger deals, feels quite similar to what I guess what we saw last year. In your conversations with CEOs and corporate board, where do you guys think we are on the cycle in terms of having some of this activity spilling into a smaller part of the market so kind of middle market deal et cetera? Is it still some ways off or what do you think is holding that part of the market back?

Actually middle market activities have been okay. It hasn't been terrible. And number transactions are still pretty good in that particular market place. I think the headline has been dominated obviously by the larger deals. When you look at the factors that drive M&A and we tend to focus on the most CEO confidence, financing, valuations. On the confidence front I think US improved to last year, ended the year before, continues to be okay. Europe, it was like in some groups as I mentioned few minutes ago. Financing is very inexpensive, obviously valuations have risen a bit but relatively to the cost of money and to organic growth opportunities, they are probably not terrible. And so consequently the activity levels are pretty good at this moment in a larger part of the market. But there is no reason not to expect the same in the middle market.

Got you. And then my second question is just around the operating leverage. I think on the prior call and I think you alluded to the same this time around that with a reasonable backdrop in revenue we should seek continue to operating leverage in the model given the steps you guys have taken over the last couple of years. Any updated thoughts on that just as far as maybe some sensitivity as far as revenues and how that would show up in the operating leverage and the model for this year?

Sure. I guess I talked about this before. There are two sources of operating leverage for our business when we have revenue growth. The first is the non-comp side where roughly speaking between the two businesses is about two third, is more or less fixed with inflation and the other third is variable to the activity levels of the business. So there is operating leverage there and then second comes from a bit of operating leverage left on the comp side. And the asset were the marginal level of compensation is probably pretty closet to the average so there is not so much room there which is not unusual for us in management business is at the stage of the cycle. On the advisory side we still expect there is marginal level of competition will be below the average level of compensation so there is still some leverage there. But all this is again at the backdrop of revenue growth. So we continue to be -- in a good revenue environment, we should be able to continue to deliver operating leverage in business.

And we go next to Brennan Hawken with UBS.

Good morning. So at the end of last year you indicated that RSP activity had slowed in the year end. Have you seen any change in that trend and maybe you could update us on that front?

Yes. It feels pretty good right now. Generally speaking it is a little bit last time it was in 2014 but higher than it was in 2013 and again it is more about the mix and it is the size of the mandate as opposed to just the sheer number of them that come into the RPS now. It feels it is pretty good right now.

Terrific. And then I know that you guys have spoken about being focused on the processes and operations in order to squeeze down the corporate headwind to your pretax margins. Can you help us think about that opportunity maybe in percentage point terms and sort of timeframe we should think about how you are approaching that opportunity?

I think is built into the kind of -- I won't say formula but way I describe the operating leverage and the business minutes ago. We are really focused on is making sure that as much as a non-comp expense as we can as controllable. And that wherever the compensation expense exists it's adding value to the business.

And we go next to Joel Jeffrey with Keefe, Bruyette, & Woods.

Hi, good morning, guys. Apologize if I miss this little bit earlier, can you just talk about the makeshift within your asset management business and how that translated into the sort of weaker than I think what we had expected management fees?

Yes. Well, the change in the mix is really if you look at the detail of our earnings release you see the breakdown by platform and you will see a little bit less of emerging market as you see in global equity. And then little bit more emerging market set and international equity the multi region platform equity. And that's what's driving some of this change in the mix. Not a huge one as you will see.

[Operator Instructions] We will go next to Jim Mitchell with Buckingham Research.

Hey, good morning. Maybe just if you could remind us on your thought process on your debt footprint long term. Obviously, you refinanced and retired about $50 million on a net basis, you are carrying little under a $1 billion right now. Is that something that you think you just waddle away over time or is that a good number to think about or just how do you think about the long-term debt given your high cash flow?

At this point, we pushed these maturities out so there is no what I describe a substantial risk in the business associated with any debt maturities, this isn't a business you invest in for that, and then for us excess cash gives us a lot of flexibility with excess cash to return to shareholders and the opportunity comes along additional debt mix [indiscernible] positive we will do that. But we will be very focused on what's going to drive shareholders return and doesn't adversely affect our credit situation.

Okay. So it is all about the trade off.

Yes.

And we will go next to Devin Ryan with JMP Securities.

Great, good morning. So you guys highlight across border activity and I know activity in the Europe has been positive theme for Lazard. And so I am just trying to get a little bit more perspective there. Is that theme being driven more by just a diverging currency levels or from a bigger picture perspective, is this really just an inevitable trend as firm globalize and it is more open to expanding a broad with lots more perspective there since that has been a nice story for you guys.

I think a little of everything. One is obviously Europe was at very low level of activity in 2011, 2012 and 2013, really since the crisis until kind of mid year 2014 and we had -- I think better than market year, substantially better than market here in 2014 in Europe. And I think it is a function of lot of factors. First, QE is held evaluation in his public health confidence a bit and so that helps drive M&A activity. Second, currency I mean it helps someone and hurt others. So you can probably find two sides to that story. And then third is I think you hit it on the head which in a role which is someone start to organic growth M&A activity substitutes for that or looking at, able to grow your top line and drive the cost efficiency. So that tends, people's horizons now or rather than just one border. So it tends to drive cross border activity.

Okay, great. And then maybe just on the restructuring business. When you think about the outlook for that business. Are there any areas that could maybe drive some recovery there? I mean we are hearing a little bit about energy is picking up a little bit for restructuring. But is there anything that can move the needle for the outlook in that or the energy as example just not enough at this point to do much?

I think the areas which -- look generally speaking with restructuring it feels like it is a top level as long as the economy generally speaking is sound and the financing environment is as easy as it is, you are not likely to see a substantial or broad based pick up in the restructuring market. That said we are seeing a pickup of activity in the oil and gas area, whole energy area and probably a little bit in retail as well. But I think that's more specific to situations.

And we will go next to Jeff Harte with Sandler O'Neill

Good morning, guys. Nice quarter. On pretax margin and I like kind of where I can start this question from, were coming from 26% plus which is good but if we look at the lower and kind of your targeted range for non-comp and comp ratio, it suggest something closer to 29% pretax margin with non-comp had to be in the big delta there. Is having third of the non-comp base now be variable versus fixed, I mean does that give you enough flexibility for us to start talking about pretax margin pushing 30% and you are in the near term.

Look, I am not making any commitments to new margin target at this point. I think we demonstrated a focus on being able to drive operating leverage in a business over the last few years. And the future is a function of a number of things. One is obviously the operating environment. This business does well when revenues are going up with regard to margin. But also we are periodically investing in the business since we were kind of have to an effect expense all our investment given that it function comp generally speaking. We are kind of cautious about seeing exactly what going to be in any given quarter or any given year right now. But I think generally speaking as revenues improve, there is operating leverage on both the asset -- on both the comp, at least on the advisory side to some degree and on the non-comp expenses.

Okay. And finally on the buyback. So $185 million I guess is about similar to last year. Should we look at that as just you tend to do it first hand or front hand loaded as part of the buyback activity or is there any potential read through to maybe favoring buybacks a little more than like special year end preferred dividend you've done last couple of years.

Look, we are going to be opportunistic with regard to return on capital and focus on the way that we think most effectively drives shareholder value and is consistent with our model that is one which where we generally speaking had a better handle on the years as we get close to the year end. If you look what we have done over the last several years, we have in every year more than offset the dilution associated with any of the share grant; opportunistically buy shares when we thought there was opportunity to do so. And return any excess cash either through dividend or special dividend. And then in some cases pay down debt. I think we are going to continue to do the same thing. This is a good model for our business.

Okay. Then I ask it from the perspective of liking the special dividend, like to see actually more company do that but okay thank you.

And we will go next to Steven Chubak with Nomura.

Hi, good morning. So, Ken, I appreciate the general commentary that you provide on the RFP backlog, but when thinking about the trajectory for the theory going forward, I was hoping you can give us a sense as to how the demand outlook currently is for some of the higher fee products, specifically emerging markets equity and whether we've seen any -- has the improvement that we've seen in the end market proxy actually translated into any pick up in demand.

Look, generally speaking RFP activity feels good to us. We have a lot of capacity in a broad range of products. As you know the large EME fund has been closed since 2010. So the growth in our business and the incremental fee is come from many of the other products that we introduced or have been opened. We continue to think we got a good mix of products that are attracted to our debt in base and at good economic outlook for Lazard.

Okay. Thank you and then just one quick follow up. Just switching over to the advisory side, I know you don't like to speak on individual deals but I was hoping you could provide some general commentary on some of the challenges or obstacles facing larger transactions given anti-trust pressure, some of which we've been hearing about more and more at least in the current environment.

Well, I think you have to separate what's going on in the sort of cable, telecom, internet space, perhaps from the larger activity, generally speaking earlier in the cycle you saw lot of deals taking place, which have lot of high -- it is conservative environment, there weren’t that many big deals taking place and when they did happen they tended to be straight down to center of the fairway, deals that are straight down the center of the fairway tend to have lot of savings and therefore potentially lot of overlaps and therefore tend to be tougher anti-trust deals, which is why I think there is a general impression that it is a tougher and trust environment that it has been in the past. But I think it is a little bit nature of the deals themselves to assess that. I think the recent activity in the telecom, internet sector, in the whole cable area; it is a lot of public policy issues involved in that. So I think it is a slightly different analysis than the traditional anti-trust analysis.

We will go next to Patrick [indiscernible] with Raymond James.

So in your 10-K filing there was some commentary about steps that you have taken to act as underwriter in public offerings to support your financial advisory business. So the question is this something I think could be meaningful opportunity for Lazard going forward specifically with regards to underwriting or is it just kind of -- it is nice to have in and maybe something we will play out over time?

Our focus, our core focus is on the advisory business and we really very focused on providing great advice to companies both on the strategic side as well as the capital side, that is understanding and providing by its around balance sheet. Risk taking isn't in our model.

And we will go next to Vincent Hung with Autonomous.

Hi, good morning. Just on announcement fees, can you say whether the benefit is meaningfully versus last year?

I am sorry, can you repeat the question.

On announcement fees, can you say whether it is a benefit of meaningfully on last year?

I don't think the mix is totally different from last year, no.

Okay. And just on announcement here today, it is clear that you are quite busy, apart from restructuring where do you think you are relatively quite?

Quiet, look it is pretty good market right now and so it is dangerous to say we are firing on all cylinders. You see never really firing on all cylinders. I think this activity in healthcare obviously, activity in the consumer side, we've seen as I said earlier little tick up in oil and gas on the restructuring side. It continues to be fair amount of activity in the tech, media and telecom area for us. So it feels, it is pretty well distributed at the moment. Take a probably a little quieter than most other sectors relative to the size of the sector itself. Just given the regulatory concern stuff.

This now concludes the Lazard conference call. Thank you for participation.

Thank you.