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Jefferies Announces 2021 Financial Results for the Three Months and Year Ended November 30, 2021

All-Time Record Annual Pre-Tax Income; 24.5% 2021 Return on Adjusted Tangible Equity1

Quarterly Dividend Increased 20% to $0.30 Per Share

Jefferies Financial Group Inc. (NYSE: JEF)



Q4 Financial Highlights

  • Net income attributable to common shareholders of $325 million, or $1.20 per diluted share; adjusted net income attributable to common shareholders2 of $369 million, or $1.36 per diluted share, after removing fourth quarter expenses of $59 million related to bondholder make-whole and tender premium payments on an aggregate of $1.06 billion in debt which will reduce our future interest expense
  • Quarterly Investment Banking net revenues of $1.18 billion
  • Combined Capital Markets and Other net revenues of $438 million
  • Asset Management net revenues (before allocated net interest3) of $55 million
  • Annualized return on adjusted tangible equity of 16.5%1; adjusted annualized return on adjusted tangible equity of 18.7%4
  • Repurchased 2.0 million shares of common stock for $88 million, or an average price of $42.91 per share; our Board of Directors has increased our share buyback authorization by $88 million back to a total of $250 million

"What a year! Once again, Jefferies delivered record results in Investment Banking and Capital Markets and Asset Management. Our performance and momentum are the direct result of the persistent hard work and dedication of our 4,508 Jefferies Group employee-partners around the globe, decades of investment to create strong breadth and depth of capabilities across our integrated Investment Banking and Capital Markets platforms, our unique partnership culture and a supportive operating environment. Those factors have driven Jefferies to an important position of scale within our industry, and a meaningful and sustainable step change in our market position and brand. We have never wavered in prioritizing the needs and interests of our clients. We believe our momentum is excellent and, while there will be inevitable bumps in the road, our growth prospects are terrific.

"Our results and momentum derive from our incredible and increasingly global team. Jefferies' strategy is based substantially on human capital, with the right amount of supporting financial capital commensurate with market opportunity. We are committed to recruiting and growing great talent at all levels. We are thrilled that we enter fiscal 2022 with 278 Managing Directors in Investment Banking, a 24% increase from one year prior. This increase was driven equally by internal promotion of talented people we nurtured and trained, and external recruiting of experienced professionals. Our overall Jefferies Group headcount grew by 15% in 2021, enabling us to keep up with the demands from our clients and to support further growth. We have been investing for many years now in enhanced efforts to train, support, develop and grow our human capital, and we see further opportunity in this regard ahead.

"We believe Jefferies' future growth will be fueled by the continued buildout of our Investment Banking effort, enhancing our Capital Markets businesses, and further developing our Leucadia Asset Management alternative asset management platform. We will continue winding down our legacy Merchant Banking portfolio prudently and patiently, and are confident that, as we have proven in the past, there is value to be realized in excess of tangible book value.

"Our Investment Banking backlog5 is robust and consistent with levels from a year ago.

"In light of our performance and prospects, as well as our limited need for incremental equity capital, our Board of Directors has increased our quarterly dividend to $0.30 per share, a 140% increase from two years ago. We will continue also to return capital to shareholders via share buybacks as well as, if financial conditions and circumstances permit, in-kind distributions or special cash dividends as we continue to wind down the legacy merchant banking portfolio."

Richard Handler, CEO, and Brian Friedman, President

Please refer to the just-released Jefferies Financial Group Annual Letter from our CEO and President for broader perspective on 2021, as well as our strategy and outlook.

Financial Summary

(Dollars in thousands, except per share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

November 30,

 

 

Twelve Months Ended

November 30,

 

 

2021

 

2020

%

Change

 

2021

 

2020

%

Change

Net revenues:

 

 

 

 

 

 

 

 

 

Investment Banking and Capital Markets

$

1,613,362

 

$

1,537,362

5%

 

$

6,796,631

 

$

4,989,138

36%

Asset Management

42,798

 

88,977

(52)%

 

336,690

 

235,255

43%

Merchant Banking

152,794

 

231,852

(34)%

 

1,040,733

 

764,460

36%

Corporate

773

 

1,350

(43)%

 

3,042

 

13,258

(77)%

Consolidation Adjustments

(831)

 

1,246

(167)%

 

8,233

 

8,763

(6)%

Total net revenues

$

1,808,896

 

$

1,860,787

(3)%

 

$

8,185,329

 

$

6,010,874

36%

 

 

 

 

 

 

 

 

 

 

Income before income taxes

$

425,565

 

$

421,540

1%

 

$

2,254,105

 

$

1,067,083

111%

 

 

 

 

 

 

 

 

 

 

Net income attributable to

common shareholders

$

324,913

 

$

307,267

6%

 

$

1,667,403

 

$

769,605

117%

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share

$

1.20

 

$

1.11

8%

 

$

6.13

 

$

2.65

131%

 

 

 

 

 

 

 

 

 

 

Weighted average diluted shares

270,743

 

277,342

 

 

271,501

 

290,490

 

 

 

 

 

 

 

 

 

 

 

Annualized return on adjusted

tangible equity1

16.5%

 

17.5%

 

 

24.5%

 

11.7%

 

Highlights

Three months ended November 30, 2021

 

Twelve months ended November 30, 2021

  • Adjusted net income attributable to common shareholders2 of $369 million, or $1.36 per diluted share.
  • We repurchased 2.0 million shares for $88 million, or an average price of $42.91 per share.
  • Our Board of Directors has increased our share buyback authorization by $88 million back to a total of $250 million.

 

  • Adjusted net income attributable to common shareholders2 was $1.71 billion, or $6.29 per diluted share.
  • We repurchased 8.5 million shares for $267 million, or an average price of $31.25 per share. We had 244 million shares outstanding and 274 million shares outstanding on a fully diluted basis6 at year end. Our book value per share was $43.33 and tangible book value per fully diluted share7 was $32.45 at year end.

Investment Banking and Capital Markets

 

Investment Banking and Capital Markets

  • Investment Banking net revenues of $1.18 billion were driven by all-time record quarterly Advisory net revenues and stronger results in Equity and Debt Underwriting as compared with the prior year quarter.
  • Combined Capital Markets and Other net revenues of $438 million were 30% lower as compared to prior year quarter, primarily due to challenging market conditions for fixed income trading leading to lower volumes, as compared with the prior year quarter, which benefited from high levels of client activity due to more favorable market conditions.

 

  • Record Investment Banking net revenues of $4.42 billion were driven by record Advisory net revenues, as well as record Equity and Debt Underwriting net revenues on more deals being completed and an increase in average transaction fees.
  • Combined Capital Markets and Other net revenues of $2.37 billion reflecting Equities net revenues driven by strong client activity and trading performance as a result of meaningful growth across all of our products and regions, and solid Fixed Income net revenues.

Three months ended November 30, 2021

 

Twelve months ended November 30, 2021

Asset Management

 

Asset Management

  • Asset Management net revenues reflects lower investment returns compared to the prior year quarter, partially offset by an increase in management, performance and similar fees and revenues.

 

  • Record Asset Management revenues (before allocated net interest3) of $382 million were significantly higher than prior year revenues due to $121 million in management, performance and similar fees and revenues in the current year, an increase of 355% over the prior year.

Legacy Merchant Banking

 

Legacy Merchant Banking

  • Merchant Banking results reflect the normalization of the results of Idaho Timber and a decline in the value of several of our investments in public companies.

 

  • Merchant Banking full year results reflect record revenue and pre-tax income from Idaho Timber and mark-to-market increases in the value of several of our investments in public and private companies.

Quarterly Cash Dividend

The Jefferies Board of Directors declared a quarterly cash dividend equal to $0.30 per Jefferies common share, payable on February 25, 2022 to record holders of Jefferies common shares on February 14, 2022.

* * * *

Amounts herein pertaining to November 30, 2021 represent a preliminary estimate as of the date of this earnings release and may be revised upon filing our Annual Report on Form 10-K with the Securities and Exchange Commission (“SEC”). More information on our results of operations for the three and twelve months ended November 30, 2021 will be provided upon filing our Annual Report on Form 10-K with the SEC, which we expect to file on or about January 28, 2022.

This press release contains certain “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on current views and include statements about our future and statements that are not historical facts. These forward-looking statements are usually preceded by the words “should,” “expect,” “intend,” “may,” “will,” "would," or similar expressions. Forward-looking statements may contain expectations regarding revenues, earnings, operations, and other results, and may include statements of future performance, plans, and objectives. Forward-looking statements may also include statements pertaining to our strategies for future development of our businesses and products. Forward-looking statements represent only our belief regarding future events, many of which by their nature are inherently uncertain. It is possible that the actual results may differ, possibly materially, from the anticipated results indicated in these forward-looking statements. Information regarding important factors, including Risk Factors that could cause actual results to differ, perhaps materially, from those in our forward-looking statements is contained in reports we file with the SEC. You should read and interpret any forward-looking statement together with reports we file with the SEC. We undertake no obligation to update or revise any such forward-looking statement to reflect subsequent circumstances.

Past performance may not be indicative of future results. Different types of investments involve varying degrees of risk. Therefore, it should not be assumed that future performance of any specific investment or investment strategy will be profitable or equal the corresponding indicated performance level(s).

Notes

  1. Return on adjusted tangible equity (a non-GAAP financial measure) is defined as Jefferies' annualized adjusted net income (a non-GAAP financial measure) divided by our beginning of period adjusted tangible shareholders' equity (a non-GAAP financial measure). Refer to schedule on page 12 for reconciliation to U.S. GAAP amounts.
  2. Adjusted net income attributable to common shareholders (a non-GAAP financial measure) excludes the total expense of $59 million ($44 million net of taxes) related to $1.06 billion of debt repurchases in the fourth quarter. Refer to schedule on page 12 for reconciliation to U.S. GAAP.
  3. Allocated net interest represents an allocation to Asset Management of certain of our long-term debt interest expense, net of interest income on our Cash and cash equivalents and other sources of liquidity. Allocated net interest has been disaggregated to increase transparency and to make clearer actual Investment return. Refer to Selected Financial and Statistical Information on pages 8 - 10.
  4. Adjusted return on adjusted tangible equity (a non-GAAP financial measure) is defined as Jefferies' annualized adjusted net income excluding the net income impact of the $59 million of total expense ($44 million net of taxes) related to $1.06 million of debt repurchases in the fourth quarter (a non-GAAP financial measure) divided by our beginning of period adjusted tangible shareholders' equity (a non-GAAP financial measure). Refer to schedule on page 13 for reconciliation to U.S. GAAP amounts.
  5. Backlog represents an estimate of our net revenues from expected future transactions. As an indicator of net revenues in a given future period, it is subject to limitations. The time frame for the realization of revenues from these expected transactions varies and is influenced by factors we do not control. Transactions not included in the estimate may occur, and expected transactions may also be modified or cancelled.
  6. Shares outstanding on a fully diluted basis (a non-GAAP financial measure) is defined as Jefferies common shares outstanding plus restricted stock units, stock options, conversion of redeemable convertible preferred shares and other shares. Refer to schedule on page 14 for reconciliation to U.S. GAAP amounts.
  7. Tangible book value per fully diluted share (a non-GAAP financial measure) is defined as adjusted tangible book value (a non-GAAP financial measure) divided by shares outstanding on a fully diluted basis (a non-GAAP financial measure). Refer to schedule on page 14 for reconciliation to U.S. GAAP amounts.

Summary

(In thousands, except per share amounts) (Unaudited)

 

 

 

 

 

 

 

 

Three Months Ended

November 30,

 

Twelve Months Ended

November 30,

 

2021

 

2020

 

2021

 

2020

Net revenues

$

1,808,896

 

 

$

1,860,787

 

 

$

8,185,329

 

 

$

6,010,874

 

Income before income taxes and loss related to

associated companies

$

458,714

 

 

$

427,500

 

 

$

2,348,524

 

 

$

1,142,566

 

Loss related to associated companies

(33,149)

 

 

(5,960)

 

 

(94,419)

 

 

(75,483)

 

Income before income taxes

425,565

 

 

421,540

 

 

2,254,105

 

 

1,067,083

 

Income tax provision

91,973

 

 

113,535

 

 

576,729

 

 

298,673

 

Net income

333,592

 

 

308,005

 

 

1,677,376

 

 

768,410

 

Net (income) loss attributable to the noncontrolling interests

(6,586)

 

 

238

 

 

(3,850)

 

 

5,271

 

Net (income) loss attributable to the redeemable

noncontrolling interests

(245)

 

 

428

 

 

826

 

 

1,558

 

Preferred stock dividends

(1,848)

 

 

(1,404)

 

 

(6,949)

 

 

(5,634)

 

Net income attributable to common shareholders

$

324,913

 

 

$

307,267

 

 

$

1,667,403

 

 

$

769,605

 

 

 

 

 

 

 

 

 

Basic earnings per common share attributable to

Jefferies common shareholders:

 

 

 

 

 

 

 

Net income

$

1.23

 

 

$

1.12

 

 

$

6.29

 

 

$

2.68

 

 

 

 

 

 

 

 

 

Basic: weighted average shares

261,637

 

 

272,901

 

 

263,595

 

 

285,693

 

 

 

 

 

 

 

 

 

Diluted earnings per common share attributable to

Jefferies common shareholders:

 

 

 

 

 

 

 

Net income

$

1.20

 

 

$

1.11

 

 

$

6.13

 

 

$

2.65

 

 

 

 

 

 

 

 

 

Diluted: weighted average shares

270,743

 

 

277,342

 

 

271,501

 

 

290,490

 

A summary of results for the three months ended November 30, 2021 is as follows (in thousands):

 

Investment

Banking and

Capital

Markets

 

Asset

Management

 

Merchant

Banking

 

Corporate

 

Parent

Company

Interest

 

Consolidation

Adjustments

 

Total

Net revenues

$

1,613,362

 

 

$

42,798

 

 

$

152,794

 

 

$

773

 

 

$

 

 

$

(831)

 

 

$

1,808,896

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of sales

 

 

 

 

79,954

 

 

 

 

 

 

 

 

79,954

 

Compensation and benefits

684,294

 

 

22,802

 

 

31,424

 

 

6,576

 

 

 

 

 

 

745,096

 

Non-compensation expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

Floor brokerage and clearing fees

68,809

 

 

10,843

 

 

 

 

 

 

 

 

 

 

79,652

 

Selling, general and other expenses

300,211

 

 

15,294

 

 

41,259

 

 

5,299

 

 

26,004

 

 

(379)

 

 

387,688

 

Interest expense

 

 

 

 

5,628

 

 

 

 

11,628

 

 

 

 

17,256

 

Depreciation and amortization

22,681

 

 

439

 

 

16,958

 

 

458

 

 

 

 

 

 

40,536

 

Total non-compensation expenses

391,701

 

 

26,576

 

 

63,845

 

 

5,757

 

 

37,632

 

 

(379)

 

 

525,132

 

Total expenses

1,075,995

 

 

49,378

 

 

175,223

 

 

12,333

 

 

37,632

 

 

(379)

 

 

1,350,182

 

Income (loss) before income

taxes and loss related to

associated companies

537,367

 

 

(6,580)

 

 

(22,429)

 

 

(11,560)

 

 

(37,632)

 

 

(452)

 

 

458,714

 

Loss related to associated companies

 

 

 

 

(33,149)

 

 

 

 

 

 

 

 

(33,149)

 

Income (loss) before income taxes

$

537,367

 

 

$

(6,580)

 

 

$

(55,578)

 

 

$

(11,560)

 

 

$

(37,632)

 

 

$

(452)

 

 

425,565

 

Income tax provision

 

 

 

 

 

 

 

 

 

 

 

 

91,973

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

$

333,592

 

A summary of results for the three months ended November 30, 2020 is as follows (in thousands):

 

Investment

Banking and

Capital

Markets

 

Asset

Management

 

Merchant

Banking

 

Corporate

 

Parent

Company

Interest

 

Consolidation

Adjustments

 

Total

Net revenues

$

1,537,362

 

 

$

88,977

 

 

$

231,852

 

 

$

1,350

 

 

$

 

 

$

1,246

 

 

$

1,860,787

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of sales

 

 

 

 

102,717

 

 

 

 

 

 

 

 

102,717

 

Compensation and benefits

842,513

 

 

30,152

 

 

25,336

 

 

13,365

 

 

 

 

 

 

911,366

 

Non-compensation expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

Floor brokerage and clearing fees

59,968

 

 

5,221

 

 

 

 

 

 

 

 

 

 

65,189

 

Selling, general and other expenses

239,795

 

 

9,328

 

 

41,138

 

 

6,513

 

 

 

 

(2,486)

 

 

294,288

 

Interest expense

 

 

 

 

6,972

 

 

 

 

13,672

 

 

 

 

20,644

 

Depreciation and amortization

21,012

 

 

471

 

 

16,735

 

 

865

 

 

 

 

 

 

39,083

 

Total non-compensation expenses

320,775

 

 

15,020

 

 

64,845

 

 

7,378

 

 

13,672

 

 

(2,486)

 

 

419,204

 

Total expenses

1,163,288

 

 

45,172

 

 

192,898

 

 

20,743

 

 

13,672

 

 

(2,486)

 

 

1,433,287

 

Income (loss) before income

taxes and loss related to

associated companies

374,074

 

 

43,805

 

 

38,954

 

 

(19,393)

 

 

(13,672)

 

 

3,732

 

 

427,500

 

Loss related to associated companies

 

 

 

 

(5,960)

 

 

 

 

 

 

 

 

(5,960)

 

Income (loss) before income taxes

$

374,074

 

 

$

43,805

 

 

$

32,994

 

 

$

(19,393)

 

 

$

(13,672)

 

 

$

3,732

 

 

421,540

 

Income tax provision

 

 

 

 

 

 

 

 

 

 

 

 

113,535

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

$

308,005

 

A summary of results for the twelve months ended November 30, 2021 is as follows (in thousands):

 

Investment

Banking and

Capital

Markets

 

Asset

Management

 

Merchant

Banking

 

Corporate

 

Parent

Company

Interest

 

Consolidation

Adjustments

 

Total

Net revenues

$

6,796,631

 

 

$

336,690

 

 

$

1,040,733

 

 

$

3,042

 

 

$

 

 

$

8,233

 

 

$

8,185,329

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of sales

 

 

 

 

470,870

 

 

 

 

 

 

 

 

470,870

 

Compensation and benefits

3,323,601

 

 

82,726

 

 

109,186

 

 

35,611

 

 

 

 

 

 

3,551,124

 

Non-compensation expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

Floor brokerage and clearing fees

266,035

 

 

35,825

 

 

 

 

 

 

 

 

 

 

301,860

 

Selling, general and other expenses

1,024,617

 

 

48,913

 

 

160,337

 

 

19,253

 

 

26,004

 

 

(677)

 

 

1,278,447

 

Interest expense

 

 

 

 

23,951

 

 

 

 

53,133

 

 

 

 

77,084

 

Depreciation and amortization

85,178

 

 

1,901

 

 

67,577

 

 

2,764

 

 

 

 

 

 

157,420

 

Total non-compensation expenses

1,375,830

 

 

86,639

 

 

251,865

 

 

22,017

 

 

79,137

 

 

(677)

 

 

1,814,811

 

Total expenses

4,699,431

 

 

169,365

 

 

831,921

 

 

57,628

 

 

79,137

 

 

(677)

 

 

5,836,805

 

Income (loss) before income

taxes and loss related to

associated companies

2,097,200

 

 

167,325

 

 

208,812

 

 

(54,586)

 

 

(79,137)

 

 

8,910

 

 

2,348,524

 

Loss related to associated companies

 

 

 

 

(94,419)

 

 

 

 

 

 

 

 

(94,419)

 

Income (loss) before income taxes

$

2,097,200

 

 

$

167,325

 

 

$

114,393

 

 

$

(54,586)

 

 

$

(79,137)

 

 

$

8,910

 

 

2,254,105

 

Income tax provision

 

 

 

 

 

 

 

 

 

 

 

 

576,729

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

$

1,677,376

 

A summary of results for the twelve months ended November 30, 2020 is as follows (in thousands):

 

Investment

Banking and

Capital

Markets

 

Asset

Management

 

Merchant

Banking

 

Corporate

 

Parent

Company

Interest

 

Consolidation

Adjustments

 

Total

Net revenues

$

 

4,989,138

 

 

$

 

235,255

 

 

$

 

764,460

 

 

 

$

 

13,258

 

 

 

$

 

 

 

 

$

 

8,763

 

 

 

$

6,010,874

 

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of sales

 

 

 

 

 

 

 

338,588

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

338,588

 

 

Compensation and benefits

 

2,735,080

 

 

 

89,527

 

 

 

77,072

 

 

 

 

39,184

 

 

 

 

 

 

 

 

 

 

 

2,940,863

 

 

Non-compensation expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

Floor brokerage and clearing fees

 

241,083

 

 

 

25,509

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

266,592

 

 

Selling, general and other expenses

 

810,753

 

 

 

46,045

 

 

 

199,128

 

 

 

 

26,197

 

 

 

 

 

 

 

 

(3,167

)

 

 

1,078,956

 

 

Interest expense

 

 

 

 

 

 

 

31,425

 

 

 

 

 

 

 

 

53,445

 

 

 

 

 

 

 

84,870

 

 

Depreciation and amortization

 

82,334

 

 

 

5,247

 

 

 

67,362

 

 

 

 

3,496

 

 

 

 

 

 

 

 

 

 

 

158,439

 

 

Total non-compensation expenses

 

1,134,170

 

 

 

76,801

 

 

 

297,915

 

 

 

 

29,693

 

 

 

 

53,445

 

 

 

 

(3,167

)

 

 

1,588,857

 

 

Total expenses

 

3,869,250

 

 

 

166,328

 

 

 

713,575

 

 

 

 

68,877

 

 

 

 

53,445

 

 

 

 

(3,167

)

 

 

4,868,308

 

 

Income (loss) before income

taxes and loss related to

associated companies

 

1,119,888

 

 

 

68,927

 

 

 

50,885

 

 

 

 

(55,619

)

 

 

 

(53,445

)

 

 

 

11,930

 

 

 

1,142,566

 

 

Loss related to associated companies

 

 

 

 

 

 

 

(75,483

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(75,483

)

 

Income (loss) before income taxes

$

1,119,888

 

 

$

68,927

 

 

$

(24,598

)

 

 

$

(55,619

)

 

 

$

(53,445

)

 

 

$

11,930

 

 

 

1,067,083

 

 

Income tax provision

 

 

 

 

 

 

 

 

 

 

 

 

298,673

 

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

$

768,410

 

 

Selected Financial and Statistical Information

(Amounts in Thousands, Except Other Data) (Unaudited)

 

 

Quarter Ended

 

November 30, 2021

 

August 31, 2021

 

November 30, 2020

Investment Banking, Capital Markets and Asset

Management Net Revenues:

 

 

 

 

 

 

 

 

 

 

 

Advisory

$

587,726

 

$

583,887

 

$

356,823

 

 

 

 

 

 

Equity underwriting

370,636

 

367,460

 

340,561

Debt underwriting

222,655

 

229,329

 

208,780

Total underwriting

593,291

 

596,789

 

549,341

 

 

 

 

 

 

Other investment banking

(5,240)

 

(360)

 

9,446

 

 

 

 

 

 

Total investment banking

1,175,777

 

1,180,316

 

915,610

 

 

 

 

 

 

Equities

290,380

 

236,532

 

327,314

Fixed income

132,771

 

205,795

 

263,119

Total capital markets

423,151

 

442,327

 

590,433

 

 

 

 

 

 

Other

14,434

 

28,153

 

31,319

 

 

 

 

 

 

Total Investment Banking and Capital Markets Net

Revenues (1)

1,613,362

 

1,650,796

 

1,537,362

 

 

 

 

 

 

Asset management fees and revenues (2)

13,065

 

18,869

 

6,936

Investment return (3)

41,647

 

4,890

 

93,849

Allocated net interest (3)

(11,914)

 

(11,155)

 

(11,808)

Total Asset Management Net Revenues

42,798

 

12,604

 

88,977

 

 

 

 

 

 

Total Investment Banking, Capital Markets and Asset

Management Net Revenues

$

1,656,160

 

$

1,663,400

 

$

1,626,339

 

 

 

 

 

 

Investment Banking, Capital Markets and Asset

Management Non-compensation Expenses:

 

 

 

 

 

 

 

 

 

 

 

Floor brokerage and clearing fees

$

79,652

 

$

68,982

 

$

65,189

Underwriting costs

26,932

 

21,474

 

36,551

Technology and communications

101,523

 

93,801

 

86,639

Occupancy and equipment rental

24,859

 

24,694

 

24,011

Business development

42,386

 

24,380

 

21,651

Professional services

54,758

 

49,298

 

42,490

Depreciation and amortization

23,120

 

21,529

 

21,483

Other

65,047

 

13,851

 

37,781

 

 

 

 

 

 

Total Investment Banking, Capital Markets and Asset

Management Non-compensation Expenses

$

418,277

 

$

318,009

 

$

335,795

 

 

 

 

 

 

(Amounts in Thousands, Except Other Data) (Unaudited)

 

 

 

 

 

Twelve Months Ended

 

November 30, 2021

 

November 30, 2020

Investment Banking, Capital Markets and Asset Management Net Revenues:

 

 

 

 

 

 

 

Advisory

$

1,873,560

 

$

1,053,500

 

 

 

 

Equity underwriting

1,557,364

 

902,016

Debt underwriting

935,131

 

545,978

Total underwriting

2,492,495

 

1,447,994

 

 

 

 

Other investment banking

57,196

 

(103,330)

 

 

 

 

Total investment banking

4,423,251

 

2,398,164

 

 

 

 

Equities

1,300,877

 

1,128,910

Fixed income

959,122

 

1,340,792

Total capital markets

2,259,999

 

2,469,702

 

 

 

 

Other

113,381

 

121,272

 

 

 

 

Total Investment Banking and Capital Markets Net Revenues (1)

6,796,631

 

4,989,138

 

 

 

 

Asset management fees and revenues (2)

120,733

 

26,539

Investment return (3)

260,864

 

257,200

Allocated net interest (3)

(44,907)

 

(48,484)

Total Asset Management Net Revenues

336,690

 

235,255

 

 

 

 

Total Investment Banking, Capital Markets and Asset Management Net Revenues

$

7,133,321

 

$

5,224,393

 

 

 

 

 

 

Investment Banking, Capital Markets and Asset Management Non-compensation Expenses:

 

 

 

 

 

 

 

Floor brokerage and clearing fees

$

301,860

 

$

266,592

Underwriting costs

117,572

 

95,636

Technology and communications

382,502

 

334,322

Occupancy and equipment rental

101,900

 

91,442

Business development

111,796

 

67,807

Professional services

196,467

 

159,045

Depreciation and amortization

87,079

 

87,581

Other

163,293

 

108,546

Total Investment Banking, Capital Markets and Asset Management Non-

compensation Expenses

$

1,462,469

 

$

1,210,971

 

 

 

 

(Amounts in Thousands, Except Other Data) (Unaudited)

 

 

 

 

 

 

 

Quarter Ended

 

November 30, 2021

 

August 31, 2021

 

November 30, 2020

Other Data:

 

 

 

 

 

Number of trading days

63

 

65

 

63

Number of trading loss days (4)

11

 

20

 

3

Average VaR (in millions) (5)

$

10.14

 

$

12.69

 

$

14.92

 

 

 

 

 

 

 

 

 

Twelve Months Ended

 

 

 

November 30, 2021

 

November 30, 2020

Other Data:

 

 

 

Number of trading days

 

 

252

 

252

Number of trading loss days (4)

 

 

60

 

26

Average VaR (in millions) (5)

 

 

$

13.63

 

$

10.51

 

(1)

  Allocated net interest is not separately disaggregated for Investment Banking and Capital Markets. This presentation is aligned to our Investment Banking and Capital Markets internal performance measurement.

(2)

  Includes management and performance fees from funds and accounts managed by us as well as our share of fees received by affiliated asset management companies with which we have revenue and profit share arrangements, as well as earnings on our ownership interest in affiliated asset managers.

(3)

  Allocated net interest represents an allocation to Asset Management of certain of our long-term debt interest expense, net of interest income on our Cash and cash equivalents and other sources of liquidity. Allocated net interest has been disaggregated to increase transparency and to make clearer actual Investment return. We believe that aggregating Investment return and Allocated net interest would obscure the Investment return by including an amount that is unique to our credit spreads, debt maturity profile, capital structure, liquidity risks and allocation methods.

(4)

  Number of trading loss days is calculated based on trading activities in our Investment Banking and Capital Markets and Asset Management business segments.

(5)

  VaR estimates the potential loss in value of trading positions in our Investment Banking and Capital Markets and Asset Management business segments due to adverse market movements over a one-day time horizon with a 95% confidence level. For a further discussion of the calculation of VaR, see "Value-at-Risk" in Part II, Item 7A "Quantitative and Qualitative Disclosures About Market Risk" in our Annual Report on Form 10-K for the year ended November 30, 2020.

Financial Data and Metrics

(Amounts in Millions, Except Other Data) (Unaudited)

 

 

Quarter Ended

 

November 30,

2021

 

August 31,

2021

 

November 30,

2020

Financial position (1):

 

 

 

 

 

Total assets

$

60,404

 

 

$

58,037

 

 

$

53,118

 

Total assets less goodwill and intangible assets for the period

$

58,506

 

 

$

56,132

 

 

$

51,205

 

Cash and cash equivalents

$

10,755

 

 

$

9,481

 

 

$

9,055

 

Financial instruments owned

$

19,829

 

 

$

19,735

 

 

$

18,125

 

Level 3 financial instruments owned (2)

$

579

 

 

$

671

 

 

$

651

 

Goodwill and intangible assets

$

1,898

 

 

$

1,905

 

 

$

1,913

 

Total equity

$

10,580

 

 

$

10,401

 

 

$

9,439

 

Total shareholders' equity

$

10,554

 

 

$

10,382

 

 

$

9,404

 

Tangible equity (3)

$

8,656

 

 

$

8,477

 

 

$

7,490

 

 

 

 

 

 

 

Other data and financial ratios:

 

 

 

 

 

Leverage ratio (1) (4)

5.7

 

 

5.6

 

 

5.6

 

Tangible gross leverage ratio (1) (5)

6.8

 

 

6.6

 

 

6.8

 

 

 

 

 

 

 

Number of employees, at period end

5,556

 

 

5,493

 

 

4,945

 

(1)

  Amounts pertaining to November 30, 2021 represent a preliminary estimate as of the date of this earnings release and may be revised in our Annual Report on Form 10-K for the year ended November 30, 2021.

(2)

  Level 3 financial instruments represent those financial instruments classified as such under Accounting Standards Codification 820, accounted for at fair value and included within Financial instruments owned.

(3)

  Tangible equity (a non-GAAP financial measure) represents total Jefferies shareholders' equity less goodwill and identifiable intangible assets. We believe that tangible equity is meaningful for valuation purposes, as financial companies are often measured as a multiple of tangible equity, making these ratios meaningful for investors.

(4)

  Leverage ratio equals total assets divided by total equity.

(5)

  Tangible gross leverage ratio (a non-GAAP financial measure) equals total assets less goodwill and identifiable intangible assets divided by tangible equity. The tangible gross leverage ratio is used by rating agencies in assessing our leverage ratio.

Non-GAAP Reconciliations

The following tables reconcile our non-GAAP measures to their respective U.S. GAAP measures. Management believes such non-GAAP measures are useful to investors as they allow them to view our results through the eyes of management, while facilitating a comparison across historical periods. These measures should not be considered a substitute for, or superior to, measures prepared in accordance with U.S. GAAP.

Net Income Attributable to Common Shareholders and Earnings Per Share GAAP Reconciliation

Reconciliation of Jefferies net income attributable to common shareholders to adjusted net income attributable to common shareholders (a non-GAAP measure) and diluted earnings per share to adjusted earnings per share (a non-GAAP measure) (in thousands, except per share amounts):

 

 

Three Months

Ended

November 30,

2021

 

Twelve Months

Ended

November 30,

2021

 

 

 

 

 

 

Net income attributable to common shareholders (GAAP)

$

324,913

 

$

1,667,403

 

Net income impact for calling Jefferies Group 2023 Notes

25,016

 

25,016

 

Net income impact for repurchasing Jefferies Financial Group 2023 Notes

19,251

 

19,251

 

Adjusted net income attributable to common shareholders (non-GAAP)

$

369,180

 

$

1,711,670

 

 

 

 

 

 

Jefferies Financial Group diluted earnings per share (GAAP)

$

1.20

 

$

6.13

 

Diluted earnings per share impact for calling Jefferies Group 2023 Notes

0.09

 

0.09

 

Diluted earnings per share impact for repurchasing Jefferies Financial Group 2023 Notes

0.07

 

0.07

 

Adjusted Jefferies Financial Group diluted earnings per share (non-GAAP)

$

1.36

 

$

6.29

Return on Adjusted Tangible Equity Reconciliation

The table below reconciles our Net income attributable to common shareholders to adjusted net income and our Shareholders' equity to adjusted tangible shareholders' equity (in thousands):

 

 

 

Three Months

Ended

November 30,

2021

 

Three Months

Ended

November 30,

2020

 

Twelve Months

Ended

November 30,

2021

 

Twelve Months

Ended

November 30,

2020

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to common shareholders (GAAP)

 

$

324,913

 

 

$

307,267

 

 

$

1,667,403

 

 

$

769,605

 

 

Intangible amortization and impairment expense,

net of tax

 

2,773

 

 

2,814

 

 

10,649

 

 

11,370

 

 

Adjusted net income (non-GAAP)

 

$

327,686

 

 

$

310,081

 

 

$

1,678,052

 

 

$

780,975

 

 

Annualized adjusted net income (non-GAAP)

 

$

1,310,744

 

 

$

1,240,324

 

 

$

1,678,052

 

 

$

780,975

 

 

 

 

 

 

 

 

 

 

 

 

 

 

August 31,

2021

 

August 31,

2020

 

November 30,

2020

 

November 30,

2019

 

 

 

 

 

 

 

 

 

 

 

Shareholders' equity (GAAP)

 

$

10,381,883

 

 

$

9,410,665

 

 

$

9,403,893

 

 

$

9,579,705

 

 

Less: Intangible assets, net and goodwill

 

(1,905,163)

 

 

(1,914,542)

 

 

(1,913,467)

 

 

(1,922,934)

 

 

Less: Deferred tax asset

 

(479,016)

 

 

(312,600)

 

 

(393,687)

 

 

(462,468)

 

 

Less: Weighted average quarter-to-date or year-

to-date impact of cash dividends and share repurchases

 

(62,644)

 

 

(111,613)

 

 

(243,003)

 

 

(545,398)

 

 

Adjusted tangible shareholders' equity (non-GAAP)

 

$

7,935,060

 

 

$

7,071,910

 

 

$

6,853,736

 

 

$

6,648,905

 

 

 

 

 

 

 

 

 

 

 

 

Return on adjusted tangible equity

 

16.5

%

 

17.5

%

 

24.5

%

 

11.7

%

Adjusted Return on Adjusted Tangible Equity Reconciliation

The table below reconciles our Net income attributable to common shareholders to adjusted net income excluding debt repurchase expense and our Shareholders' equity to adjusted tangible shareholders' equity (in thousands):

 

 

 

Three Months

Ended

November 30,

2021

 

 

 

 

 

Net income attributable to common shareholders (GAAP)

 

$

324,913

 

 

Intangible amortization and impairment expense, net of tax

 

2,773

 

 

Net income impact for calling Jefferies Group 2023 Notes

 

25,016

 

 

Net income impact for repurchasing Jefferies Financial Group 2023 Notes

 

19,251

 

 

Adjusted net income excluding debt repurchase expense (non-GAAP)

 

$

371,953

 

 

Annualized adjusted net income excluding debt repurchase expense (non-GAAP)

 

$

1,487,812

 

 

 

 

 

 

 

 

August 31,

2021

 

 

 

 

 

Shareholders' equity (GAAP)

 

$

10,381,883

 

 

Less: Intangible assets, net and goodwill

 

(1,905,163)

 

 

Less: Deferred tax asset

 

(479,016)

 

 

Less: Weighted average quarter-to-date impact of cash dividends and share repurchases

 

(62,644)

 

 

Adjusted tangible shareholders' equity (non-GAAP)

 

$

7,935,060

 

 

 

 

 

 

Adjusted return on adjusted tangible equity

 

18.7

%

Jefferies Book Value and Shares Outstanding GAAP Reconciliation

The table below reconciles our book value (shareholders' equity) to adjusted tangible book value and our common shares outstanding to fully diluted shares outstanding (in thousands, except per share amounts):

 

 

 

November 30, 2021

 

 

 

 

 

Book value (GAAP)

 

$

10,553,755

 

 

Redeemable convertible preferred shares converted to common shares (1)

 

125,000

 

 

Stock options (2)

 

121,085

 

 

Intangible assets, net and goodwill

 

(1,897,500)

 

 

Adjusted tangible book value (non-GAAP)

 

$

8,902,340

 

 

 

 

 

 

Common shares outstanding (GAAP)

 

243,541

 

 

Restricted stock units ("RSUs")

 

20,108

 

 

Redeemable convertible preferred shares converted to common shares (1)

 

4,441

 

 

Stock options (2)

 

5,109

 

 

Other

 

1,126

 

 

Fully diluted shares outstanding (non-GAAP) (3)

 

274,325

 

 

 

 

 

 

Book value per share outstanding

 

$

43.33

 

 

Tangible book value per fully diluted share outstanding

 

$

32.45

 

 

(1)

 

Redeemable convertible preferred shares added to book value and fully diluted shares assume that the redeemable convertible preferred shares are converted to common shares.

 

(2)

 

Stock options added to book value are equal to the total number of stock options outstanding as of November 30, 2021 of 5,109,000 multiplied by the weighted average exercise price of $23.70 on November 30, 2021. Stock options added to fully diluted shares are equal to the total stock options outstanding on November 30, 2021.

 

(3)

 

Fully diluted shares outstanding include vested and unvested RSUs as well as the target number of RSUs issuable under the senior executive compensation plans. Fully diluted shares outstanding also include all stock options and the additional common shares if our redeemable convertible preferred shares were converted to common shares.

 

Contacts

Jonathan Freedman 212.778.8973

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