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Lazard Ltd (LAZ)
Q4Â 2018 Earnings Conference Call
Feb. 05, 2019, 8:00 a.m. ET
Contents:
- Prepared Remarks
- Questions and Answers
- Call Participants
See all our earnings call transcripts.
Prepared Remarks:
Operator
Good morning, and welcome to Lazard's Full Year and Fourth Quarter 2018 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 questions-and-answers session. instructions will be for provided at that time. (Operator Instructions)
At this time, I would like to turn the call over to Alexandra Deignan, Lazard's Director of Investor Relations. Please go ahead.
Alexandra M. Deignan -- Director of Investor Relations
Thank you, Simon. Good morning, and welcome to Lazard's earnings call for the full year and fourth quarter of 2018. I'm Alexandra Deignan, the Company's Director of Investor Relations. In addition to today's audio comments, we have posted our earnings release and an investor presentation, which you can access on our website at www.lazard.com. 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 measure 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 some opening remarks, and then we will open the call up to questions.
I will now turn the call over to Ken.
Kenneth M. Jacobs -- Chairman and Chief Executive Officer
Good morning. Today, we reported record annual results for 2018. Both our businesses achieved rapid annualized operating income despite significant market volatility. For the year, we generated record earnings from operations, even as we increased our investments for growth. These results underscore the strength of our franchise and the breadth and depth of our business. We are delivering highly differentiated advice and solutions to our global client base in every major region in the world.
Our Financial Advisory business generated record annual operating revenue for the fourth year in a row. Strategic Advisory revenue grew 26% in the fourth quarter and 17% for the year. We gained market share in global M&A as our announcement volume increased 44%, compared to the market's 16%. In 2018, we advised on 51 announced M&A transactions valued at $1 billion or more compared to 50 the year before. We advised on five out of the 10 largest M&A transactions announced globally and three out of 10 largest completed transactions.
We continue to be a leader in global restructuring and debt advisory assignments. In 2018, we advised on many of the world's largest, most complex restructuring challenges for corporate clients. All of our Financial Advisory practices are active and revenue in every major region was up in 2018. Our Shareholder Advisory practice continues to win assignments in the U.S., Europe and Asia. Our Sovereign and Capital Advisory business is continuing to advise governments and corporations on financing strategy and capital raising. And Private Capital Advisory has been a leader in the growing market of secondary fund placements as well as new fund raising.
We continue to see growth opportunities across the business and have been building our professional base accordingly. In 2018, we needed 10 new Managing Directors globally and recruited 10 MDs and 4 senior advisors in North America and Europe.
Our Asset Management business generated record annual operating revenue in 2018, slightly higher than the prior year in a challenging environment marked by periods of high volatility. Our investments in new strategies and platform extensions continue to bear fruit. Our quantitative, convertible and global equity strategies all achieved net inflows for the fourth quarter and full year. We continue to invest in the growth of Asset Management through development and scaling up of new and existing platforms and expansion of our distribution globally.
In January, we launched our newest strategy, Symbiotic Alpha, which lends quantitative and fundamental investment techniques for proprietary insights on industries and companies. In 2018, we launched new funds in alternatives, real assets, fixed income and international equities. We have reinforced our ESG expertise with new global Co-Heads in Europe and London. We continue to expand our European and Asian distribution including new offices in Amsterdam and Melbourne and we have brought on several new investment groups including a new XAI capability for our alternatives platform.
Evan will now provide color on our financial results and capital management, and I will comment on our outlook.
Evan L. Russo -- Chief Financial Officer
Thank you, Ken. Lazard's full year and fourth quarter results reflect the stability and continued growth of our business. Full-year operating revenue in 2018 was a record $2.75 billion, 4% higher than the prior year. Diluted net income on an adjusted basis for the year increased 10% to $4.16 per share, a record level. In Financial Advisory, we completed the year with a record $1.5 billion in operating revenue, up 9% from 2017. As we anticipated, the second half of the year was stronger than last year's second half. The increase was driven by broad-based strength across our strategic advisory services especially in M&A. Annual restructuring revenue declined from the prior year's high level reflecting a more normalized level of activity from current market condition, but our global franchise remain quite active.
Financial Advisory's fourth quarter revenue increased 19% over last year's fourth quarter, reflecting strong increases for both M&A and our Private Capital Advisory business.
In Asset Management, record annual operating revenue of $1.2 billion was slightly higher than last year's record level. For the fourth quarter, operating revenue declined 17% from last year's record level as global market volatility affected valuation across all asset classes.
Management fees increased 2% year-over-year, reaching a record level. In the fourth quarter, they decreased 6% sequentially from the third quarter of 2018, primarily reflecting the broad-based market decline. For 2018, our average management fee was 49 basis points, down from 51 basis points in 2017. The decline primarily reflects the change in our mix of assets. Market depreciation had the greatest impact on higher fee strategies such as emerging markets while at the same time we experienced increased demand for our quantitative and fixed income strategies.
Incentive fees for the year were $21 million compared to $46 million in the prior year, fourth quarter incentive fees of $1 million versus $90 million in the fourth quarter of 2017, reflecting our general long bias in a declining market environment. Average AUM for the fourth quarter was $225 billion, down 8% from last year's record level and down 6% sequentially from the third quarter of 2018. The sequential decrease was driven primarily by market depreciation of $21.1 billion and net outflows of $3.2 billion. For full-year 2018, we had net outflows of $4.9 billion, primarily from our local and multi-regional equities platforms. Gross inflows remain strong across our investment platforms, in particular, in global, quantitative and convertible strategies. We finished 2018 with AUM of $215 billion. But as of January 25th 2019, AUM was approximately $226 billion. The increase was driven by market appreciation (technical difficulty) million and net inflows of $660 million.
Beginning this month, we will start reporting AUM on a monthly basis. Given the institutional nature of our business, flows can be lumpy from month-to-month. But the aggregate AUM is a good directional indicator. We will issue the monthly reports in a press release on or around eighth business day of each month.
Looking ahead across our franchise. Asset Management entered 2019 with AUM that was $26 billion lower than its average in 2018, which will create tough comparisons with last year's strong first half. However, the new year's off to a good start with AUM up $11 billion and modest net inflows.
In Financial Advisory, our current level of activity is strong. However, given the global slowdown in announcements over the last few months, we can have challenging comparisons with last year's record first half.
Turning to expenses. Our compensation ratio for 2018 on an adjusted basis was a record low of 55.1%, down from 55.8% in 2017. On an awarded basis, our annual comp ratio was 55.8%, up slightly from 55.6% in 2017, the awarded comp ratio account for all compensation committed to in a given year, irrespective of deferrals. Both our adjusted and awarded comp ratios were at the low end of our targeted range, reflecting our continued cost discipline even as we make significant investments in the business.
Adjusted non-compensation expense for the year rose 5%, reflecting our increased investments in the business, primarily in our technology infrastructure. For the full-year 2018, our non-comp expense ratio was 17.6% remains -- remained well within our target range. In the fourth quarter, non-comp expense was $16 million higher than last year's level. The largest driver was higher pension plan expenses mainly resulting from new accounting guidelines and increased technology investment, which we've highlighted throughout the year.
With our continued focus on revenue growth and cost discipline, we delivered operating margin expansion in 2018. On an adjusted basis, our operating margin was a record 27.4% for the full year, up from 26.8% in the prior year.
Regarding taxes, our 2018 effective tax rate was 22.7%, down from 24.1% a year ago. This was in line with our expectation of an annual effective tax rate in the low 20s. For 2019, we currently expect an effective tax rate in the mid 20s.
Turning now to capital allocation. We continue to generate strong cash flow to support return of capital to shareholders. In 2018, we returned over $1 billion, primarily through a combination of share repurchases and dividends. Taking into account shareholders' feedback, we are allocating significantly more capital to share repurchases, leading to a reduction in the level of our extra cash dividend at year-end.
In the fourth quarter of 2018, we opportunistically bought back 6.4 million shares for a total of 12.2 million shares repurchased in 2018. As a result of our repurchase program, our fourth quarter diluted weighted average share count declined by 4% from the prior year to 126.8 million shares. Even after our high level of repurchases, strong cash flow in 2018 recorded an extra cash dividend of $0.50 per share. Yesterday, we declared dividend totaling $0.94 per share, comprising a quarterly dividend of $0.44 per share, plus the extra cash dividend. In 2019, we expect to continue our share repurchase program at a minimum to offset potential dilution from year-end equity grants. Our total outstanding repurchase authorization is now $510 million following yesterday's additional authorization by our Board of Directors.
Ken will now conclude our remarks.
Kenneth M. Jacobs -- Chairman and Chief Executive Officer
Thank you, Evan. A few words on our outlook before we open the call to questions. The global macroeconomic environment continues to have solid fundamentals for the near term despite increased geopolitical risks and market volatility. While global growth estimates have been revised modestly downward, CEOs and Boards have been only constructive in their outlook for 2019. Many emerging markets and their currencies have rebounded in recent weeks.
In Financial Advisory, technology-driven disruption continues to be a catalyst for strategic activity across industries. Shareholder activism has become a global phenomenon with record number of campaigns launched in Europe and Asia-Pacific last year. We are well positioned in this environment with the most dedicated strategic and shareholder advisory capabilities and deeply established presence in local markets, reinforced with expertise in global sector and specialty teams.
In Asset Management, institutional investors are increasingly dividing their portfolios between low-cost asset strategies and high value-added asset strategies. We have built our investing franchise and expertise in markets that we are with deep fundamental research, and we continue to invest in people and technology to reinforce that investment edge. We see opportunities for productive growth across our businesses, and we are allocating our resources accordingly. We are aggressively increasing our investment in our technology, infrastructure and data site capabilities to enhance both our Asset Management and Financial Advisory businesses. We continue to hire strategically while developing and promoting our outstanding performance. We remain focused on serving all 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.
Alexandra M. Deignan -- Director of Investor Relations
Operator?
Questions and Answers:
Operator
Thank you. (Operator Instructions)
We'll now take our first question from Richard Ramsden from Goldman Sachs. Please go ahead. Your line is open.
Richard Ramsden -- Goldman Sachs -- Analyst
Okay. So, good morning, everybody. Could we just start with the capital returns. So, conceptually, how should we think about the change in the composition of capital returns? Should we just think of this as opportunistic given where the share price is? Or does this represent more of a broader shift in philosophy of capital returns?
Evan L. Russo -- Chief Financial Officer
Sure. Hey, Richard, it's Evan. I'll take that one. So as we mentioned, we returned a significant amount of capital to shareholders in 2018. And we've always taken a balanced approach to thinking about how best to return that capital to shareholders. Our philosophy remains the same in terms of making sure to return all excess capital to shareholders and the question is, how to do that? And we've always taken a balanced approach between dividends and share repurchases. As we mentioned last quarter, we took into account some of the shareholder feedback when we came up with our view this year based on the share price and the market availability, that we said we were going to tilt toward more share repurchases as we did and we bought back significant amount of shares, 6.4 million shares in Q4, as we mentioned, at the same time, reduced our special dividend. So clearly we are tilting more toward the share repurchases to take advantage of markets and we look forward to continuing to stay focused on returning the capital to shareholders in the most efficient way possible.
Operator
We will now take our next question from Brennan Hawken from UBS. Please go ahead. Your line is open.
Brennan Hawken -- UBS -- Analyst
Good morning, thanks for taking the question. So, Evan, I believe you indicated in your comments that reported revenue in restructuring was down on strong last year, but could you comment on the outlook? Ken, I believe you indicated that continued technological disruption feeds into not only strategic M&A but the potential for restructuring, there was a large -- there is a competitor of yours that has a prominent restructuring business that in their call highlighted activity picking up in APAC on the back of some of the trade disruption. So how should we think about the outlook for restructuring? And is it reasonable to continue to believe that we could see or is it reasonable to continue to expect decent M&A along with a pickup in restructuring for a time like we saw a couple of years ago? Thanks.
Kenneth M. Jacobs -- Chairman and Chief Executive Officer
Yes. So, great question. What we've thought a lot about over the course of last couple of years. First, this has been an unusually -- an unusual period for restructuring, because we've been in a very strong macroeconomic cycle now really since '14 and we've had more or less a pretty good restructuring revenues during this whole period of time and it's been choppy, obviously '14, '15 into '16 were strong, '17 still pretty good, '18 more muted. But it's still been, you know, I would say higher than one would have expected for a -- this strong a macroeconomic environment. And so, our view has been and will continue to be that a driver of that has really been technological disruption. I would argue '14, '15 in the oil and gas arena in part was really technology driven, the revolution in shale, of driving down -- driving production, but also of driving oversupply, and I think what you've seen sweeping across both the retail sector and now other areas as a result of the technological disruption taking place in e-commerce among other areas, it has an impact on industries, it then leads to restructuring. So I think we're going to see an elevated level of restructuring, it maybe choppy for the foreseeable future, as long as this catalyst in the economy, technological disruption, is playing out, I think it's going to playing out for a very long time. In fact I think there are areas that haven't been touched yet. That will be. So that -- that's kind of one observation.
The second on APAC. We pay very careful attention to that, actually the restructuring, doing restructuring, if you're thinking in China, not so easy, there is all kinds of issues around domestic license and things like that, that have to be addressed. I think the balance of the activity will likely to be in the U.S. and Europe. And we're -- I think we're quite well positioned for that. And this year, we're already involved in, I think, two of the most notable restructuring assignments out there, Sears and PG&E.
Brennan Hawken -- UBS -- Analyst
Thanks for the color.
Operator
We will now take our next question from Jim Mitchell from Buckingham Research. Please go ahead. Your line is open.
Kenneth M. Jacobs -- Chairman and Chief Executive Officer
Hi, Jim.
Jim Mitchell -- Buckingham Research -- Analyst
Hi, good morning, maybe just getting back to the buyback, I guess, first, it seems like maybe more of it was toward the latter part of the quarter, just wanted to confirm that. Then, as we think about '19, do you have any -- in your mind, you have $510 million left in the buyback, I guess you said that's through December of next year, but do you feel like there's any constraints in terms of the speed at which you do that? Can you still be opportunistic like you were in the fourth quarter, if you feel it's not -- do you feel there's an opportunity like, just trying to think through, if there's any from your perspective liquidity constraints on putting that to work quickly?
Evan L. Russo -- Chief Financial Officer
Sure, hey Jim, it's Evan, yes, for the first one, we bought back, as I said, 6.4 million shares in Q4. It was pretty much pretty spread throughout the quarter, although obviously with the volatility we saw toward the end of the quarter more than the beginning of the quarter, I think we've probably had larger repurchases during that period of time, but generally it was pretty much spread through the quarter. And what we did was, we basically saw that there was some volatility and good volumes going through. And so we're able to kind of speed up on some of the repurchases we planned to do in Q1 and Q2 of this year. I think going forward into 2019, look, we still, as we said, we've got the buyback as we always do, the compensation-related shares that we're issuing out into the market and that we'll do really in the course of the first couple of quarters. There's no liquidity constraints in us buying back those shares. We set the authorization higher just to give us flexibility for things we might want to do throughout the coming year, but obviously we're going to buyback what we need to for compensation as well as all excess proceeds and we'll do that as markets allow us to over the next couple of quarters.
Jim Mitchell -- Buckingham Research -- Analyst
Okay. Thanks.
Operator
We'll now take our next question from Devin Ryan from JMP Securities. Please go ahead. Your line is open.
Kenneth M. Jacobs -- Chairman and Chief Executive Officer
Hi Devin.
Devin Ryan -- JMP Securities -- Analyst
Great. Hi, good morning, great to see the strong buyback activity. So question here on the operating margin. So right now you guys are at the low end of the comp ratio target range and you're in the middle of the non-comp target range. So kind of a two-part question. I guess, first, in a scenario where markets remain reasonable, and we have some revenue growth, is there any comp ratio flexibility left from here given kind of where you guys are? And then two, just on non-comp expenses, can you remind us how the pension plan accounting affected results? Just trying to get some sense of the dollar amount there if possible. And there's also obviously some seasonality in the fourth quarter, but at the same time, you're investing in the business. So just trying to think about the trajectory of non-comp expenses over the course of 2019, I am obviously assuming the fourth quarter is not a good starting point as a run rate.
Kenneth M. Jacobs -- Chairman and Chief Executive Officer
Okay. Let me take the first part of that question and let Evan take the second part. On room for more margin improvement, which is really a combination of leverage you get off of compensation through revenue growth and the same thing off of non-comp expenses, look, in a up-market revenue environment, generally speaking, we've been able to accomplish some operating leverage -- operating leverage out of compensation and out of non-comp expenses. So yeah, we see strong revenue increase or reasonable revenue increase, I think we have the ability to continue to improve margins. The only qualification I give to that is, we are seeing more and more opportunity around investments, partly in terms of people that drive our core business, partly in terms of teams and add-ons to the Asset Management business, and we clearly needed investment and we'll continue to make an investment in technology infrastructure to support what we think is a significantly changing landscape with regard to the tools you use to drive the Asset Management business, and I think ultimately that is going to have a real impact on the tools we use to drive the advisory business as well. So that would be my qualification. Evan, you want to --
Evan L. Russo -- Chief Financial Officer
Yeah, sure. So on the non-comp question, with regards to the pension that we called out with regards to non-comp, so, yeah, as you know, the pension guidelines, the -- I'm sorry, accounting guidelines changed for non-service pension cost to run through the non-comp line, we called out Q4 because one of the components of that related to withdrawal of the pension plans where you now have to recognize any unamortized gains and losses immediately, when you have withdrawals out of the plan, and so we had slightly more than normal in Q4, and so that led to probably somewhere between $6 million and $7 million of additional cost in the non-comp line for Q4.
Devin Ryan -- JMP Securities -- Analyst
Okay, great, it's very helpful. Just a quick follow-up here. Just kind of the outlook for European M&A, a lot of moving parts right now with some of the economic data and Brexit clearly create some uncertainty. So just love to get a little bit of perspective around the tone for business in Europe, how you guys are feeling about your positioning there and then any additional color on outlook in Europe, just given some of those moving parts?
Kenneth M. Jacobs -- Chairman and Chief Executive Officer
Yes. So, great question. So market position, obviously very strong, I think the challenge for Europe is the -- is twofold. One is, you have Brexit which is going to, I think for the first -- more -- have a more -- more of an impact on the UK M&A landscape this year until it's resolved than it has over the last couple of years. So we can expect that to happen. I think you've already seen that in the second half or certainly the fourth quarter of last year, and into the first part of this year. On the continent, surprisingly activity is still -- was good last year on the continent, and it's kind of -- surprisingly is OK so far this year, but there is, I would say, more geopolitical macroeconomic uncertainty again country-by-country in Europe than it is the case in the United States. I think U.S. feels more constructive as a whole than Europe does, but again, in Europe, I think the -- the -- probably the market most at risk is in the UK right now.
Devin Ryan -- JMP Securities -- Analyst
Got it. Okay. Thank you.
Operator
We'll now take our next question from Michael Needham from Bank of America. Please go ahead. Your line is open.
Kenneth M. Jacobs -- Chairman and Chief Executive Officer
Hi, Michael.
Michael Needham -- Bank of America -- Analyst
Hey, good morning. I was wondering if you can provide the quarter-end share count, just for modeling purposes, given how much in buybacks you guys did in the fourth quarter? And then also just, if you wouldn't mind discussing performance for your largest strategies in the Asset Management business over the last two months, it seemed like EM debt was down a decent amount in the fourth quarter, but I think EM equity had actually been doing pretty well on a relative basis heading into the downturn.
Kenneth M. Jacobs -- Chairman and Chief Executive Officer
Evan?
Evan L. Russo -- Chief Financial Officer
So I'll kick it off on the share count. Yes, so at year-end, in the fourth quarter, we had 126.8 million shares on a weighted basis for Q4, given the buyback, you could probably assume that it's another 2 million shares off of that was really the ending share count for the full year, if you take out the leading component of that for Q4.
Michael Needham -- Bank of America -- Analyst
Okay.
Kenneth M. Jacobs -- Chairman and Chief Executive Officer
And then on performance, I think your assessment on -- look,compared to where we were, I would say, end of second quarter into the third quarter, our performance has improved pretty dramatically in the emerging market equities platform. I think we've closed gap very significantly in terms of the underperformance. And then I think on the currency and emerging market debt strategies, we saw -- also had some -- we had improvements in one not quite as much as in emerging market equities and the other pretty close.
Michael Needham -- Bank of America -- Analyst
Okay, great.Thank you.
Kenneth M. Jacobs -- Chairman and Chief Executive Officer
Generally speaking, it's been a good few months, I mean the strategies have done what you would have anticipated them to do in an environment like this, which is pretty gratifying naturally.
Michael Needham -- Bank of America -- Analyst
Got it.
Operator
We'll now take our next question from Jeff Harte from Sandler O'Neill. Please go ahead. Your line is open.
Kenneth M. Jacobs -- Chairman and Chief Executive Officer
Hi Jeff.
Jeffery Harte -- Sandler O'Neill -- Analyst
Hey, good morning, guys. Actually, my questions have been answered, so I'm going to pull out of the queue.
Kenneth M. Jacobs -- Chairman and Chief Executive Officer
Okay.
Operator
We'll now take our next question from Steven Chubak from Wolfe Research. Please go ahead. Your line is open .
Kenneth M. Jacobs -- Chairman and Chief Executive Officer
Hi Steven.
Steven Chubak -- CFA
Good morning. Hey, guys, so just wanted to start off with broader M&A question, certainly appreciate all the nuance color you gave Ken on the advisory outlook across the different geographies, and nearly since I've grown accustomed to hearing your thoughts on the key ingredients for M&A and how that informs your outlook, I was hoping you could speak specifically to what you're seeing and hearing in terms of valuation, financing and confidence levels across the CEOs?
Kenneth M. Jacobs -- Chairman and Chief Executive Officer
Sure. So let's split it into two markets, US and I'll try to generalize Europe, again, as I said before, there's little bit of a difference between countries in Europe. So I'd say, US valuations are more reasonable than they were last year, certainly in several sectors, much more so, technology is an example. That said, I think that partly reflects some concern around earnings going forward. I'm not sure that all of the consensus earnings for companies quite match what perhaps the buy side or market participants are anticipating. So valuations still more reasonable, but with that cautionary note. Financing, spreads widened a little bit, but generally speaking, the investment grade market is still very strong and the non-investment grade market is still -- is still open for business, a little bit weaker than it was last year, but still open for business.
And CEO confidence levels, surprisingly constructive in the US after the events of the fourth quarter. I am again a little bit pleasantly surprised by the positive sentiment in the US, the constructive sentiment I would say in the US around the macroeconomic environment as such even though growth forecasts have been pulled down a little bit. In Europe, a little bit more mixed, I think valuations again kind of the same story, more reasonable than they were last year, but again, this issue in terms of whether consensus is caught up with really what the market is expecting. The second is on financing and investment grade, we find probably a little bit more choppy in Europe on the non-investment grade than in the US, it's a little bit thinner market.
And then finally on sentiment, more mixed. I'd say in the big global multinationals probably not too different from what you find in the US but more -- but the more domestic orientated or European-oriented companies probably more concerned. So I think that's the kind of the summary.
Steven Chubak -- CFA
No, very helpful color, Ken. Thanks for that. Just one follow-up for me on the competitive landscape among the independents. On the advisory side, it looks like this year you continue to take pretty significant share from the Bulge Bracket. So, continued good momentum there, but in middle we relinquished some share to some of the large independents, and I know some of this is attributable to geographic mix, heavier gearing to cross-border and international, but was hoping you could speak to some of the factors that may have impacted performance and specifically those factors within your control and just curious if there are any industry verticals where you may have less scale relative to other independents and could look to make additional investment?
Kenneth M. Jacobs -- Chairman and Chief Executive Officer
Sure . So great question. I think the first part of your observation is absolutely correct in that we continue to take share overall in the market and that obviously means if the independents are growing share, it's probably coming from the Bulge Bracket, so observation number one is correct. Observation number two is, clearly, and I point out Evercore has obviously had a blow-out quarter. Congratulations to them. That was impressive. And I think part of that is driven by the fact -- not so much specifically to Evercore, but I think the independents generally in the United States, is that their focus of their business has been in the US, which has been by far the strongest M&A market now throughout this cycle. And while we had a great run in the US, I mean in this past quarter, I think we were up 61% in strategic M&A in the US itself, restructuring, and I think we were up for the year 31%. So it is a very good year for us in the US as well.
I think part of this is driven by the mix of business. We had obviously historic and very strong franchise outside of the United States, I think having this global franchise is invaluable, it just hasn't been as robust over the last couple of years as it has been historically in the past. So that's probably the second observation.
And then as far as white spaces are concerned, I've said this repeatedly on a number of these calls that I think for all of the independents and including us, the United States is the white space, it continues to be the market with the biggest eco, the most discipline around fees, the most public companies, and the real key is getting great people, hiring them and then getting them up online and getting them in a position where they're driving revenue and I think that's both the -- that is the opportunity, and I look at that as a real positive area for us going forward.
Steven Chubak -- CFA
That's great color, Ken. Thanks for taking my questions.
Kenneth M. Jacobs -- Chairman and Chief Executive Officer
Sure.
Operator
We'll now take our next question from Michael Brown from KBW. Please go ahead. Your line is open.
Michael Brown -- KBW -- Analyst
Hi. Good morning, guys.
Kenneth M. Jacobs -- Chairman and Chief Executive Officer
Good Morning.
Michael Brown -- KBW -- Analyst
So, yeah, just a quick one from me on the flows and fee rate. So the inflows that you've seen in 2019 so far, and I assume we'll get a lot of information in the monthly AUM disclosure, but I was kind of hoping to get a preview to kind of understand which flows you're seeing the inflows in and wondering if you could share how those -- those fee rates on those funds compared to the funds where you experienced the most outflows in the fourth quarter?
Kenneth M. Jacobs -- Chairman and Chief Executive Officer
Evan, you want to take this one?
Evan L. Russo -- Chief Financial Officer
Sure. So of the fees so far quarter-to-date, which is I guess only a few weeks and hard to really get any definitiveness out of just a couple of weeks of data and we always want to remind everybody that even monthly data given institutional nature of our business, I mean, the flows are going to be lumpy as we pointed out and we expect that to be, and we'll provide some guidance as to some of the past movements that we've seen on month-to-month basis. But Mike, to your question, I mean, so far, it's been pretty broad-based. Yeah, we had net inflows so far for the first -- the first 25 days into January and it's been broad-based across many different strategies and platforms.
I would say our fixed income strategies continue to see inflows on that front, but some really across the board, emerging markets, multi-regional and even some of the local strategies and quant as well. So I mean it's really the similar to what we've seen at the end of the year as we saw throughout most of last year. So, a continuation of that, and again, we're -- it's -- on a fee basis, it's really the same as what we've seen heading into the end of last year.
Michael Brown -- KBW -- Analyst
Great. Thank you.
Operator
Ladies and gentlemen, this now concludes the Lazard conference call. Thank you for your participation, you may now disconnect.
Duration: 39 minutes
Call participants:
Alexandra M. Deignan -- Director of Investor Relations
Kenneth M. Jacobs -- Chairman and Chief Executive Officer
Evan L. Russo -- Chief Financial Officer
Richard Ramsden -- Goldman Sachs -- Analyst
Brennan Hawken -- UBS -- Analyst
Jim Mitchell -- Buckingham Research -- Analyst
Devin Ryan -- JMP Securities -- Analyst
Michael Needham -- Bank of America -- Analyst
Jeffery Harte -- Sandler O'Neill -- Analyst
Steven Chubak -- CFA
Michael Brown -- KBW -- Analyst
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