Please stand by, we're about to begin. Good morning, and welcome to Lazard's Second Quarter 2016 Earnings Conference Call. This call is being recorded. At this time, 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'll turn the call over to Judi Frost Mackey, Lazard's Director of Global Communications. Please go ahead.

Good morning and thank you for joining our conference call to review Lazard's results for the second quarter and first half of 2016. 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 10:00 AM Eastern Daylight 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 also include certain non-GAAP financial measures. A description of these non-GAAP financial measures and their reconciliation to the comparable GAAP measures are contained in our earnings release, which has been issued this morning. For today's call, we will 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…

Thank you, Ken. Lazard's second-quarter operating revenue of $542 million was 11% lower than the record second quarter of last year; that's 7% higher than the first quarter of this year. On a constant currency basis, operating revenue for the second quarter was 10% lower than the second quarter of last year, and 7% higher than the first quarter of this year. Second quarter 2016 diluted net income per share was $0.61 post on an adjusted and U.S. GAAP basis. This compares to $0.98 per share for last year's second quarter on an adjusted basis and $2.82 per share on a GAAP basis, which primarily reflected the reversal of our valuation allowance in 2016. In Financial Advisory, Strategic Advisory operating revenue was 26% lower than the record second quarter of last year, but this was partially offset by a nearly threefold increase in Restructuring revenue. Restructuring revenue has increased for several quarters in a row, but closings tend to be lumpy. Asset Management's operating revenue was 14% lower than the record second quarter of last year, which included the impact of the disposal of our Australian private equity business. Management fees were down 8% compared to the second quarter of last year due to lower average AUM and the change in the mix of our assets. On a sequential basis, Asset Management operating revenue increased 5% from the first quarter of this year, reflecting a 5% increase in management fees. During the second quarter of 2016, AUM increased by $1.3 billion from March 31 to $192 billion. This increase was driven by net inflows of $453 million, market appreciation of $2.1 billion and negative foreign exchange movements of $1.2 billion. We achieved net inflows in the quarter despite $1.7 billion of net outflows in one of our global equity strategies.…

Thank you. Our first question comes from Conor Fitzgerald with Goldman Sachs. Conor Fitzgerald - Goldman Sachs & Co.: Hi, good morning. Thanks for taking my question. I guess, just maybe starting on restructuring, I know you previously talked about how the dot-com bubble was maybe a good proxy for what you're seeing in energy this cycle. I know this can – this revenue item can be pretty lumpy. But at least from 2Q perspective, you're kind of already tracking above that. So based on what you've seen in 2Q, do you still think that's a good way to think about the opportunity set or are you seeing more upside based on the early returns? Kenneth M. Jacobs - Chairman & Chief Executive Officer: Once again it'd be nice to be able to say that we expect the trend on 2Q but I think unfortunately it's probably more the way we originally described it, which is much like what we saw during the dot-coms. It's concentrated primarily in the natural resources sector. As we said before, I think as long as the U.S. economy remains in as good a shape as it appears to be at the moment, it probably will definitely expand outside of that. Conor Fitzgerald - Goldman Sachs & Co.: That's helpful, thanks. And then just for European M&A you've seen a little bit on the corporates kind of issuing debt, the ECB kind of buying the CSPP and then basically being an acceler for M&A. I guess when you're talking to corporates how important are they thinking about their cost of funding in Europe as an opportunity kind of to pursue M&A, especially given some of the negative debt spreads we see over there? Kenneth M. Jacobs - Chairman & Chief Executive Officer: Yeah, look, I think the key on the financing is how you use it. I think we had a – we've been in an environment for quite a while where financing has been relatively inexpensive. I think it's probably even cheaper today than any of us anticipated. But I think the challenge when you – for boards and CEOs is how you put that money to work effectively. So if you're going to do something particularly in a disinflationary environment it's probably why, it has to be something which is going to lead to growth so that you don't run the risk of undermining your financial picture in the long term. So I think our view is that money is cheap, yes, but it's very, you have to be very wise about how you deploy it right now. But I think we will continue to see activity for all the reasons I've said about that. Conor Fitzgerald - Goldman Sachs & Co.: That's helpful. Thanks for taking my questions.

Our next question comes from Ashley Serrao with Credit Suisse. Ashley Neil Serrao - Credit Suisse Securities (USA) LLC (Broker): Good morning. Kenneth M. Jacobs - Chairman & Chief Executive Officer: Hi, Ashley. Ashley Neil Serrao - Credit Suisse Securities (USA) LLC (Broker): Ken, just first I guess a question on just expenses and non-comp costs, I think most Wall Street firms nowadays are discovering new ways to optimize costs. I was just curious to get your thoughts on whether there's any room for further efficiencies in Lazard's cost structure. And what will it take to get that non-comp ratio closer to 16%, up to 16% to 20% range that you're targeting? Kenneth M. Jacobs - Chairman & Chief Executive Officer: Well, I think looking at the non-comp on a quarterly basis is a little tough, because of the fluctuations in business and expenses over a short period of time. I think if you look over the last 12 months, you have a better picture of how we're doing on the non-comp expenses. And I think that there's always opportunity to do more. And again, you have to look at those, the non-comp expense, in two categories, the variable and the fixed. On the variable side, I think we've pretty much done what we said we were going to do in terms of the two-thirds, one-third you go up with the business and a little bit down as the business goes down; and on the fixed, there we're always looking for opportunities. They usually come in spurts, they don't – and so we're just, we're always chasing. I think we've done a pretty good job over the last couple of years of finding them. And I think we'll continue to do that. Ashley Neil Serrao - Credit Suisse Securities (USA)…

Our next question comes from Brennan Hawken with UBS.

Good morning, thanks for taking the question. I guess first on the Asset Management business, can you talk, I know you gave some color on, I think you said that there was a $1.7 billion outflow in a global strategy. Was that Global Thematic? And can you update us on the AUM in that product and where we go from here? Kenneth M. Jacobs - Chairman & Chief Executive Officer: Yes, it was Global Thematic and I think the AUM in that product now is about 5...

...point 9. Kenneth M. Jacobs - Chairman & Chief Executive Officer: $5.9 billion. So, as you can see, it has increasingly less impact on us today than it would have a couple of years ago.

Great. And then can you talk about what you're seeing as far as RFP trends in your Asset Management business, how your engagement with clients is around your product line-up. And there's a decent amount of investor concern around EM-oriented strategies. Could you just give us some color on whether or not you think that concern is warranted and what you're seeing actually on the ground? Kenneth M. Jacobs - Chairman & Chief Executive Officer: Okay. So first let me start with the EM. Actually we're not seeing that at all, I think generally speaking obviously we have a very well-respected and I think very well-performing platform on the EM side. And I think we're feeling pretty good about the level of inquiries, pretty good overall about RFP activity. And we've had a pretty good six months so far this year in terms of inflows, net inflows across really most of the product ranges for us.

Okay, terrific. And the dynamics you're seeing as far as RFPs and such suggest that things should remain stable and healthy? Kenneth M. Jacobs - Chairman & Chief Executive Officer: Yeah, it's improved over the course of the year.

Great, great, thank you. Last one from me, and it's – apologies, it's a bit of a existential one, but I've been frustrated and I know a lot of your investors have been frustrated in the valuation in Lazard's stock. You guys – your primary – two primary businesses, M&A Advisory and Asset Management, you seem to trade at a discount to both of those proxies. And I guess what I'd ask you is you guys are leaders in restructuring. You have some of the most talented restructuring bankers. Have you approached your own restructuring bankers to take a look at your business? And why there is this disconnect in between what many investors believe is the intrinsic value of your business? And how that gets reflected in the public markets? Kenneth M. Jacobs - Chairman & Chief Executive Officer: Yeah, and we say what we think.

And closing that gap? Kenneth M. Jacobs - Chairman & Chief Executive Officer: So we say it's all of us as investment bankers. Look, I would say we are probably the most critical, intent analysts of our own performance in the stock market as anybody could be. We've looked at it every way, upside-down, which way, I think we have some internal views about it which a little difficult to share broadly so let me just say the following. One, we are amongst the largest shareholders in this business, the employees, myself, the senior members of Lazard. We look at the value of the stock over the long term, we really have a deep belief in this franchise. I think there is – to share with you there's a level of frustration also about valuation from time to time. I think you can see that we've been investing in our own business by buying back significantly more shares in the first half of this year than we've done before, it was double what we did last year and we anticipated these levels, we continue to be an active buyer of shares. So yeah, I mean this is something that we think about a lot. And there is some structural reasons that relate to tax rates and formal ownership, which we have some control over, over the longer term, that we carefully consider.

Okay. Great, thanks for all the color. I certainly appreciate how you all are certainly and probably as frustrated as we are. Kenneth M. Jacobs - Chairman & Chief Executive Officer: Yes.

Our next question comes from Devin Ryan with JMP Securities.

Hey, thanks. Good morning, guys. Just a couple here. I guess first, restructuring revenue strength, obviously great to see. Actually, if you can give any more context around how much of that is retainer versus completion fees? And just trying to get a sense of whether your retainers are still increasing in this backdrop you described for the economy, just trying to think about new assignments moving forward. Kenneth M. Jacobs - Chairman & Chief Executive Officer: I would say it's kind of a mix, I don't think you could expect this run rate to continue, I think this was a good quarter for restructuring. But I wouldn't annualize a run rate like this. And we've been pretty cautious about that, telling everyone that along the way. But we've had real – a significant share in the restructuring market, particularly in the oil and gas sector over the course of this year. But as I said earlier, we don't expect – it's only as the U.S. economy remains as good a shape as it is at the moment. We don't expect this really to spread much outside of the natural resources sector and as oil price starts to go up, some of these opportunities start to diminish. But overall, we've had a good run here and we continue to expect there to be a decent level of activity in this sector.

Got it. Okay. Maybe bigger picture just around how you think about Lazard's growth outlook and really ability to continue to take market share. You've had got some nice market share gains here. But the firm is already mature, I think there's maybe some perception that you're going to grow kind of with the industry trends. I'm just trying to get a sense of what's going to drive actually your market share up even if the industry maybe is flat or growing. Just trying to think about how you continue to take market share. Kenneth M. Jacobs - Chairman & Chief Executive Officer: Okay. So let me touch on the Asset Management side first. These are two parts where we're going to get growth, and then second come back to the Advisory side. I think on Asset, look, you grow by expanding or improving your current product portfolio and getting more assets in the existing group of assets, that's basically what we've – what you're doing. I think we demonstrated a real capacity to drive really well-received, well-managed new product. And roughly half of the products we have today in Asset Management didn't exist, I think it's like seven years or eight years ago. And so that's something we are highly focused on and that's mostly internal development and every now and then it's a outside-hire team but we've done a good job of seeding investments and then kind of bringing them along when there's investor support for them and we believe that we can manage them well. And I think we've done a good job of that and I think we'll continue to do that. It's steady and it's been pretty consistent. On the Advisory side, the beauty of our franchise is on one hand it's fully built out…

Great, very helpful. Maybe last quick one here. Share repurchases, you're diverging a little bit from the stated policy of neutralizing stock-based comp. Just curious, as we kind of look into the back half of the year, should we think about that on the margin or if the stock stays around here it's actually be something that's meaningful? Kenneth M. Jacobs - Chairman & Chief Executive Officer: Look, we've have been aggressive buyer of our stock over the first half of this year at or below levels we're at right now, little above, little below. I think it's been a good time to buy back stock for us, given the valuation. I mean, we doubled – almost doubled the buyback from the purchase amount dedicated to buyback from the first half of 2015 to the first half of 2016. And I think in this environment we're going to continue to be aggressive about buying back shares at these levels, yet at the same time this play can generate a lot of cash, so we continue to do both that and continue to return cash to shareholders for dividend and such. Now, we're very focused on returning capital and we're very focused on the plays that's going to have the biggest bang for the buck. And I think you can see by our actions in the first half of the year what we're doing.

Absolutely. Great, thank you guys.

Our next question comes from Steven Chubak with Nomura.

Hi, good morning. Kenneth M. Jacobs - Chairman & Chief Executive Officer: Hi, Steven.

Hi there. I was a bit surprised that you actually didn't mention or explicitly address the three key ingredients for M&A: CEO confidence, valuation, and financing. I know you touched a bit on the financing component in response to an earlier question. But I was hoping you can give some perspective as to where CEO confidence lies? And in particular I'm interested on valuation just given that markets have actually been quite resilient despite some macro fears or hiccups? Kenneth M. Jacobs - Chairman & Chief Executive Officer: Yeah, so look, on financing I think it's pretty straightforward. On confidence, again, this is really a function of stability, and volatility and macroeconomic outlook. And I think – I'd remiss in saying that confidence levels today are the same as they were a year ago. I don't think they are. I think you have more volatility, more likelihood of volatility in the future than you've had in a while. And I also think that the macroeconomic picture is a little bit more cloudy even perhaps it was six months or 12 months ago. I think U.S. is still, feels good, but just the nature of the kind of geopolitical events we're facing and some of the decisions that have been made in Europe, I think just put a little bit of a cloud on the macro environment. So I think CEO confidence is probably not at the levels that we saw a year ago, I think that it's probably a little better than probably we would have guessed post-Brexit, but that's something to keep an eye on. And on valuation, I mean the challenge on valuation is that we're in a world where money is essentially free and people are investing heavily in risk-based assets and that's driven up valuations. And…

Thanks, Ken. That's really helpful color. And since you touched on the topic of valuation, maybe to follow up to Brennan's earlier question regarding the multiple discount at which you guys currently trade. Certainly, you provided some really interesting perspective on how are you thinking about creating shareholder value just given some of the performance challenges in terms of your stock despite really good fundamentals? And at the very end of your remarks, you touched on structural issues relating to tax rates that you could control. I know there has been some debate about whether you should consider alternative structures like converting to a C corp. And I know that you've talked that down, but wanted to get a sense as to whether your view on that has actually changed? Kenneth M. Jacobs - Chairman & Chief Executive Officer: Yeah, I think one of the things that we have to be conscious of is that by being in a partnership structure, we have there – some constraints on ownership on the part of institutions and also the ability to be in indexes. And that's something we're conscious of. The solutions to this are not easy and they are costly. But I think you could assume that we're carefully monitoring this and thinking about it and how to deal with it.

And if you guys were to consider conversion, is 40% still the right tax rate to think about or just given your more diversified geographic footprint that you could actually manage to something lower than that? Kenneth M. Jacobs - Chairman & Chief Executive Officer: I think you have – look, part of this whole question is just really looking at what all the alternatives are and seeking the best possible solution. I mean, status quo is one; in the long run markets are pretty efficient and they price out discounts. And that's something which could happen. The second is then thinking about what the alternatives are and then also being somewhat confident about whether those alternatives are stable alternatives because of the nature of political decision taking place here and elsewhere. And so all of that is in the mix about thinking about this and it's not something you can kind of rush into, because there's obviously a cost to any changes. But there are also potentially some benefits. But all I can say to everyone on this is, is that this is something we're highly conscious of. We spent a lot of time thinking about it. And we're going to be – we're on top of it.

Thanks, Ken. I appreciate you taking my questions.

Our final question comes from Jim Mitchell with Buckingham Research.

Hey, good morning. Maybe just, Matthieu, you had mentioned earlier that the non-comp sort of increase was – there was investments in the franchise, could you maybe kind of detail some of those investments? I think that would be helpful.

Right, well, it's a combination of items. Some of them are marketing and development – business development expenses. Some of them are in the IT systems and also we've grown some of our teams here and there. And that comes also with additional non-comp expenses that, I would say those are the major items.

So, would you say it's the investments more heavily weighted to Asset Management, kind of split 50/50 between Advisory and Asset Management, and how do we think about where you're putting resources?

I'd say it's been in both businesses but maybe a little bit more geared on a net basis towards Financial Advisory because in the Asset Management business we have a more variable cost structure of our fund administration and outsourced services which you've seen has decreased year-over-year.

Okay, fair. And just last question on the share count. I appreciate that you guys have stepped up the buyback. But if we look at the diluted share count it's still pretty flat year-over-year. Is that simply a function in the first half you have more share issuance that you need to absorb and then the second half we'd see more of a net reduction if you keep this pace up?

That's right. I mean it's been down about 0.5 million shares or so. But you're right about your comment on the first quarter versus the second quarter.

Okay. Great, thanks.

Thank you. This now concludes the Lazard conference call. You may now disconnect.