1 Jefferies Financial Group
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(Dollars in thousands, except per share amounts) |
Three Months Ended May 31, |
Six Months Ended May 31, | ||||||||
2022 | 2021 (8) |
% Change
| 2022 | 2021 (8) |
% Change
| |||||
Net revenues: | ||||||||||
Investment Banking and Capital Markets | $ | 1,098,378 | $ | 1,598,862 | (31)% | $ | 2,580,196 | $ | 3,586,358 | (28)% |
Asset Management | 31,147 | 50,675 | (39)% | 91,103 | 279,877 | (67)% | ||||
Merchant Banking | 238,255 | 296,815 | (20)% | 427,790 | 563,819 | (24)% | ||||
Corporate | 1,818 | 724 | 151% | 2,564 | 1,314 | 95% | ||||
Consolidation Adjustments | (516) | 3,431 | (115)% | (656) | 6,081 | (111)% | ||||
Net revenues | $ | 1,369,082 | $ | 1,950,507 | (30)% | $ | 3,100,997 | $ | 4,437,449 | (30)% |
Income before income taxes | $ | 166,541 | $ | 474,139 | (65)% | $ | 558,873 | $ | 1,274,924 | (56)% |
Net income attributable to common shareholders | $ | 114,014 | $ | 352,596 | (68)% | $ | 441,461 | $ | 935,031 | (53)% |
Diluted earnings per share | $ | 0.45 | $ | 1.30 | (65)% | $ | 1.70 | $ | 3.43 | (50)% |
Weighted average diluted shares | 251,979 | 271,092 | 261,494 | 271,948 | ||||||
Annualized return on adjusted tangible equity1
| 5.8% | 19.2% | 11.2% | 27.0% |
Three months ended May 31, 2022 | Six months ended May 31, 2022 | |
•Net income attributable to common shareholders of $114 million, or $0.45 per diluted share.
•Repurchased 8.0 million shares of common stock for $258.0 million, or an average price of $32.20 per share, including 7.8 million shares of common stock in the open market for $250.0 million under our current Board of Directors authorization and 0.2 million shares of common stock for $8.1 million in connection with net-share settlements under our equity compensation plan.
•We had 232.3 million shares outstanding and 259.6 million shares outstanding on a fully diluted basis3 at May 31, 2022. Our book value per share was $44.34 and tangible book value per fully diluted share4 was $33.36at May 31, 2022.
•Our Board of Directors has authorized the repurchase in the future of an additional up to $250 million of our common stock.
|
•Net income attributable to common shareholders of $441 million, or $1.70 per diluted share.
•Repurchased 18.1 million shares of common stock for $622.2 million, or an average price of $34.47 per share, including 14.6 million shares of common stock in the open market for $500.0 million under our Board of Directors authorizations and 3.4 million shares of common stock for $122.2 million in connection with net-share settlements under our equity compensation plan.
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2 Jefferies Financial Group
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Three months ended May 31, 2022 | Six months ended May 31, 2022 | |
Investment Banking and Capital Markets
|
Investment Banking and Capital Markets
| |
•Investment Banking net revenues were $687 million, as our advisory activity remained strong, while our debt and equity underwriting net revenues were lower than the same period last year, consistent with a reduction in industry-wide deal activity.
•Combined Capital Markets net revenues of $416 million were lower as compared to prior year quarter. Equities net revenues benefited from record high commissions, partially offset by a challenging environment for risk assets, as our results were impacted by market volatility and global instability. Fixed Income net revenues reflect lower trading volumes, unrealized mark to market losses on certain mortgage inventory positions and a slowdown in securitization activity as a result of increased uncertainty in respect of inflation and interest rates.
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•Investment Banking net revenues of $1.69 billion were driven by significantly higher advisory net revenues, offset by lower net revenues in debt and equity underwriting.
•Combined Capital Markets net revenues of $896 million were lower as compared to prior year period. Equities net revenues were significantly impacted by market volatility and global instability. Fixed Income results were impacted by lower trading volumes in the face of inflation concerns and interest rate uncertainty.
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Asset Management
|
Asset Management
| |
•Asset Management net revenues reflects a difficult trading environment as compared to the prior year quarter.
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•Asset Management net revenues reflect higher asset management fees, offset by lower investment returns and lower revenues from strategic affiliates as compared to the prior year period.
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Legacy Merchant Banking
| Legacy Merchant Banking | |
•Merchant Banking results reflect strong results at Idaho Timber, offset by mark-to-market hedging losses at Vitesse and a decline in the value of several of our investments in public companies. We continue to work toward the realization of the Merchant Banking portfolio.
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•Merchant Banking results reflect strong results at Idaho Timber as favorable pricing that began in 2020 has continued for much of the second quarter, offset by mark-to-market hedging losses at Vitesse and a decline in the value of several of our investments in public companies.
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3 Jefferies Financial Group
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4 Jefferies Financial Group
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(In thousands, except per share amounts) (Unaudited) | ||||||||
Three Months Ended
May 31,
|
Six Months Ended
May 31,
| |||||||
2022 | 2021 | 2022 | 2021 | |||||
Net revenues | $ | 1,369,082 | $ | 1,950,507 | $ | 3,100,997 | $ | 4,437,449 |
Income before income taxes and loss related to associated companies
| $ | 188,241 | $ | 497,665 | $ | 610,558 | $ | 1,309,018 |
Loss related to associated companies | (21,700) | (23,526) | (51,685) | (34,094) | ||||
Income before income taxes
| 166,541 | 474,139 | 558,873 | 1,274,924 | ||||
Income tax provision | 49,683 | 120,820 | 114,040 | 339,056 | ||||
Net income | 116,858 | 353,319 | 444,833 | 935,868 | ||||
Net (income) loss attributable to the noncontrolling interests
| (1,096) | 669 | (127) | 1,412 | ||||
Net loss attributable to the redeemable noncontrolling interests
| 323 | 234 | 896 | 1,003 | ||||
Preferred stock dividends | (2,071) | (1,626) | (4,141) | (3,252) | ||||
Net income attributable to common shareholders
| $ | 114,014 | $ | 352,596 | $ | 441,461 | $ | 935,031 |
Basic earnings per common share attributable to Jefferies common shareholders:
| ||||||||
Net income
| $ | 0.46 | $ | 1.33 | $ | 1.73 | $ | 3.51 |
Basic: weighted average shares
| 249,142 | 263,280 | 253,330 | 264,829 | ||||
Diluted earnings per common share attributable to Jefferies common shareholders:
| ||||||||
Net income
| $ | 0.45 | $ | 1.30 | $ | 1.70 | $ | 3.43 |
Diluted: weighted average shares
| 251,979 | 271,092 | 261,494 | 271,948 |
5 Jefferies Financial Group
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Investment Banking and Capital Markets | Asset Management | Merchant Banking | Corporate | Parent Company Interest | Consolidation Adjustments | Total | ||||||||
Net revenues
| $ | 1,098,378 | $ | 31,147 | $ | 238,255 | $ | 1,818 | $ | - | $ | (516) | $ | 1,369,082 |
Expenses:
| ||||||||||||||
Cost of sales | - | - | 130,449 | - | - | - | 130,449 | |||||||
Compensation and benefits | 522,860 | 10,816 | 39,319 | 5,482 | - | - | 578,477 | |||||||
Non-compensation expenses: | ||||||||||||||
Floor brokerage and clearing fees | 85,247 | 8,769 | - | - | - | - | 94,016 | |||||||
Selling, general and other expenses
| 279,442 | 10,122 | 32,834 | 6,043 | - | (160) | 328,281 | |||||||
Interest expense | - | - | 926 | - | 8,385 | - | 9,311 | |||||||
Depreciation and amortization
| 22,766 | 467 | 16,655 | 419 | - | - | 40,307 | |||||||
Total non-compensation expenses | 387,455 | 19,358 | 50,415 | 6,462 | 8,385 | (160) | 471,915 | |||||||
Total expenses
| 910,315 | 30,174 | 220,183 | 11,944 | 8,385 | (160) | 1,180,841 | |||||||
Income (loss) before income taxes and loss related to associated companies
| 188,063 | 973 | 18,072 | (10,126) | (8,385) | (356) | 188,241 | |||||||
Loss related to associated companies
| - | - | (21,700) | - | - | - | (21,700) | |||||||
Income (loss) before income taxes
| $ | 188,063 | $ | 973 | $ | (3,628) | $ | (10,126) | $ | (8,385) | $ | (356) | 166,541 | |
Income tax provision
| 49,683 | |||||||||||||
Net income
| $ | 116,858 |
Investment Banking and Capital Markets (1) | Asset Management (1) | Merchant Banking (1) | Corporate | Parent Company Interest | Consolidation Adjustments (1) | Total | ||||||||
Net revenues
| $ | 1,598,862 | $ | 50,675 | $ | 296,815 | $ | 724 | $ | - | $ | 3,431 | $ | 1,950,507 |
Expenses:
| ||||||||||||||
Cost of sales | - | - | 143,847 | - | - | - | 143,847 | |||||||
Compensation and benefits
| 778,284 | 21,671 | 24,252 | 7,035 | - | - | 831,242 | |||||||
Non-compensation expenses: | ||||||||||||||
Floor brokerage and clearing fees | 66,211 | 10,599 | - | - | - | - | 76,810 | |||||||
Selling, general and other expenses
| 293,276 | 10,768 | 32,631 | 4,910 | - | (25) | 341,560 | |||||||
Interest expense | 5,271 | - | 843 | - | 13,829 | - | 19,943 | |||||||
Depreciation and amortization
| 20,805 | 489 | 17,268 | 878 | - | - | 39,440 | |||||||
Total non-compensation expenses | 385,563 | 21,856 | 50,742 | 5,788 | 13,829 | (25) | 477,753 | |||||||
Total expenses
| 1,163,847 | 43,527 | 218,841 | 12,823 | 13,829 | (25) | 1,452,842 | |||||||
Income (loss) before income taxes and loss related to associated companies
| 435,015 | 7,148 | 77,974 | (12,099) | (13,829) | 3,456 | 497,665 | |||||||
Loss related to associated companies
| - | - | (23,526) | - | - | - | (23,526) | |||||||
Income (loss) before income taxes
| $ | 435,015 | $ | 7,148 | $ | 54,448 | $ | (12,099) | $ | (13,829) | $ | 3,456 | 474,139 | |
Income tax provision
| 120,820 | |||||||||||||
Net income
| $ | 353,319 |
6 Jefferies Financial Group
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Investment Banking and Capital Markets | Asset Management | Merchant Banking | Corporate | Parent Company Interest | Consolidation Adjustments | Total | ||||||||
Net revenues
| $ | 2,580,196 | $ | 91,103 | $ | 427,790 | $ | 2,564 | $ | - | $ | (656) | $ | 3,100,997 |
Expenses:
| ||||||||||||||
Cost of sales | - | - | 226,120 | - | - | - | 226,120 | |||||||
Compensation and benefits | 1,247,136 | 30,752 | 78,642 | 11,631 | - | - | 1,368,161 | |||||||
Non-compensation expenses: | ||||||||||||||
Floor brokerage and clearing fees | 157,413 | 20,564 | - | - | - | - | 177,977 | |||||||
Selling, general and other expenses
| 520,378 | 21,976 | 59,504 | 11,980 | - | (300) | 613,538 | |||||||
Interest expense | - | - | 1,623 | - | 16,776 | - | 18,399 | |||||||
Depreciation and amortization
| 46,321 | 829 | 38,251 | 843 | - | - | 86,244 | |||||||
Total non-compensation expenses | 724,112 | 43,369 | 99,378 | 12,823 | 16,776 | (300) | 896,158 | |||||||
Total expenses
| 1,971,248 | 74,121 | 404,140 | 24,454 | 16,776 | (300) | 2,490,439 | |||||||
Income (loss) before income taxes and loss related to associated companies
| 608,948 | 16,982 | 23,650 | (21,890) | (16,776) | (356) | 610,558 | |||||||
Loss related to associated companies
| - | - | (51,685) | - | - | - | (51,685) | |||||||
Income (loss) before income taxes
| $ | 608,948 | $ | 16,982 | $ | (28,035) | $ | (21,890) | $ | (16,776) | $ | (356) | 558,873 | |
Income tax provision
| 114,040 | |||||||||||||
Net income
| $ | 444,833 |
Investment Banking and Capital Markets (1) | Asset Management (1) | Merchant Banking (1) | Corporate | Parent Company Interest | Consolidation Adjustments (1) | Total | ||||||||
Net revenues
| $ | 3,586,358 | $ | 279,877 | $ | 563,819 | $ | 1,314 | $ | - | $ | 6,081 | $ | 4,437,449 |
Expenses:
| ||||||||||||||
Cost of sales | - | - | 239,406 | - | - | - | 239,406 | |||||||
Compensation and benefits
| 1,887,979 | 44,456 | 48,781 | 22,569 | - | - | 2,003,785 | |||||||
Non-compensation expenses: | ||||||||||||||
Floor brokerage and clearing fees | 132,785 | 20,441 | - | - | - | - | 153,226 | |||||||
Selling, general and other expenses
| 522,009 | 22,932 | 59,151 | 9,579 | - | (174) | 613,497 | |||||||
Interest expense | 10,824 | - | 1,755 | - | 27,731 | - | 40,310 | |||||||
Depreciation and amortization
| 41,515 | 968 | 33,982 | 1,742 | - | - | 78,207 | |||||||
Total non-compensation expenses | 707,133 | 44,341 | 94,888 | 11,321 | 27,731 | (174) | 885,240 | |||||||
Total expenses
| 2,595,112 | 88,797 | 383,075 | 33,890 | 27,731 | (174) | 3,128,431 | |||||||
Income (loss) before income taxes and loss related to associated companies
| 991,246 | 191,080 | 180,744 | (32,576) | (27,731) | 6,255 | 1,309,018 | |||||||
Loss related to associated companies
| - | - | (34,094) | - | - | - | (34,094) | |||||||
Income (loss) before income taxes
| $ | 991,246 | $ | 191,080 | $ | 146,650 | $ | (32,576) | $ | (27,731) | $ | 6,255 | 1,274,924 | |
Income tax provision
| 339,056 | |||||||||||||
Net income
| $ | 935,868 |
7 Jefferies Financial Group
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(Amounts in Thousands, Except Other Data) (Unaudited) | ||||||
Quarter Ended | ||||||
May 31,
2022
|
February 28,
2022
|
May 31
2021 (1)
| ||||
Investment Banking, Capital Markets and Asset Management Net Revenues: | ||||||
Advisory | $ | 371,760 | $ | 543,769 | $ | 390,508 |
Equity underwriting | 122,435 | 156,100 | 324,462 | |||
Debt underwriting | 107,020 | 245,179 | 285,730 | |||
Total underwriting | 229,455 | 401,279 | 610,192 | |||
Other investment banking (2) | 85,746 | 58,134 | 82,461 | |||
Total investment banking
| 686,961 | 1,003,182 | 1,083,161 | |||
Equities | 254,807 | 277,047 | 242,949 | |||
Fixed income | 161,478 | 202,800 | 257,197 | |||
Total capital markets
| 416,285 | 479,847 | 500,146 | |||
Other (2)
| (4,868) | (1,211) | 15,555 | |||
Total Investment Banking and Capital Markets Net Revenues (3)
| 1,098,378 | 1,481,818 | 1,598,862 | |||
Asset management fees and revenues (4) | 14,116 | 44,502 | 22,490 | |||
Investment return (5) | 30,637 | 29,530 | 39,624 | |||
Allocated net interest (5)
| (13,606) | (14,076) | (11,439) | |||
Total Asset Management Net Revenues
| 31,147 | 59,956 | 50,675 | |||
Total Investment Banking, Capital Markets and Asset Management Net Revenues | $ | 1,129,525 | $ | 1,541,774 | $ | 1,649,537 |
Investment Banking, Capital Markets and Asset Management Non-compensation Expenses: | ||||||
Floor brokerage and clearing fees | $ | 94,016 | $ | 83,961 | $ | 76,810 |
Underwriting costs | 13,191 | 8,128 | 33,031 | |||
Technology and communications | 108,630 | 104,555 | 95,285 | |||
Occupancy and equipment rental | 24,561 | 25,250 | 28,771 | |||
Business development | 47,880 | 24,376 | 27,039 | |||
Professional services | 52,192 | 51,118 | 54,240 | |||
Depreciation and amortization
| 23,233 | 23,917 | 21,294 | |||
Other | 43,110 | 39,363 | 70,949 | |||
Total Investment Banking, Capital Markets and Asset Management Non-compensation Expenses
| $ | 406,813 | $ | 360,668 | $ | 407,419 |
Investment Banking, Capital Markets and Asset Management Compensation and Benefits Expenses: | ||||||
Compensation and benefits | $ | 533,676 | $ | 744,212 | $ | 799,955 |
Compensation and benefits expenses as a percentage of net revenues | 47.2% | 48.3% | 48.5% | |||
8 Jefferies Financial Group
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(Amounts in Thousands, Except Other Data) (Unaudited) | ||||
Six Months Ended May 31, | ||||
2022 | 2021 (1) | |||
Investment Banking, Capital Markets and Asset Management Net Revenues: | ||||
Advisory | $ | 915,529 | $ | 701,947 |
Equity underwriting | 278,535 | 819,268 | ||
Debt underwriting | 352,199 | 483,097 | ||
Total underwriting | 630,734 | 1,302,365 | ||
Other investment banking (2) | 143,880 | 165,483 | ||
Total investment banking
| 1,690,143 | 2,169,795 | ||
Equities | 531,854 | 773,965 | ||
Fixed income | 364,278 | 620,556 | ||
Total capital markets
| 896,132 | 1,394,521 | ||
Other (2)
| (6,079) | 22,042 | ||
Total Investment Banking and Capital Markets Net Revenues (3)
| 2,580,196 | 3,586,358 | ||
Asset management fees and revenues (4) | 58,618 | 88,799 | ||
Investment return (5) | 60,167 | 212,916 | ||
Allocated net interest (5)
| (27,682) | (21,838) | ||
Total Asset Management Net Revenues
| 91,103 | 279,877 | ||
Total Investment Banking, Capital Markets and Asset Management Net Revenues | $ | 2,671,299 | $ | 3,866,235 |
Investment Banking, Capital Markets and Asset Management Non-compensation Expenses: | ||||
Floor brokerage and clearing fees | $ | 177,977 | $ | 153,226 |
Underwriting costs | 21,319 | 69,167 | ||
Technology and communications | 213,185 | 187,224 | ||
Occupancy and equipment rental | 49,811 | 52,554 | ||
Business development | 72,256 | 45,030 | ||
Professional services | 103,310 | 92,876 | ||
Depreciation and amortization
| 47,150 | 42,483 | ||
Other | 82,473 | 108,914 | ||
Total Investment Banking, Capital Markets and Asset Management Non-compensation Expenses
| $ | 767,481 | $ | 751,474 |
Investment Banking, Capital Markets and Asset Management Compensation and Benefits Expenses: | ||||
Compensation and benefits | $ | 1,277,888 | $ | 1,932,435 |
Compensation and benefits expenses as a percentage of net revenues | 47.8% | 50.0% | ||
9 Jefferies Financial Group
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(Amounts in Thousands, Except Other Data) (Unaudited) | ||||||
Quarter Ended | ||||||
May 31,
2022
|
February 28,
2022
|
May 31
2021 (1)
| ||||
Other Data: | ||||||
Number of trading days | 64 | 61 | 64 | |||
Number of trading loss days (6) | 10 | 8 | 20 | |||
Average VaR (in millions) (7)
| $ | 11.84 | $ | 12.12 | $ | 15.77 |
Six Months Ended May 31, | ||||||
2022 | 2021 (1) | |||||
Other Data: | ||||||
Number of trading days | 125 | 124 | ||||
Number of trading loss days (6) | 18 | 29 | ||||
Average VaR (in millions) (7)
| $ | 11.98 | $ | 15.89 | ||
10 Jefferies Financial Group
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(Amounts in Millions, Except Other Data) (Unaudited) | ||||||
Quarter Ended | ||||||
May 31,
2022
|
February 28,
2022
|
May 31
2021 (1)
| ||||
Financial position (1): | ||||||
Total assets | $ | 57,214 | $ | 60,036 | $ | 57,979 |
Total assets less goodwill and intangible assets for the period | $ | 55,329 | $ | 58,142 | $ | 56,066 |
Cash and cash equivalents | $ | 8,523 | $ | 8,501 | $ | 8,443 |
Financial instruments owned | $ | 20,248 | $ | 21,633 | $ | 19,938 |
Level 3 financial instruments owned (2) | $ | 740 | $ | 640 | $ | 735 |
Goodwill and intangible assets | $ | 1,885 | $ | 1,895 | $ | 1,912 |
Total equity | $ | 10,368 | $ | 10,549 | $ | 10,095 |
Total shareholders' equity | $ | 10,300 | $ | 10,490 | $ | 10,073 |
Tangible equity (3) | $ | 8,415 | $ | 8,596 | $ | 8,160 |
Other data and financial ratios: | ||||||
Leverage ratio (1) (4) | 5.5 | 5.7 | 5.7 | |||
Tangible gross leverage ratio (1) (5) | 6.6 | 6.8 | 6.9 | |||
Number of employees, at period end | 5,619 | 5,625 | 5,151 |
11 Jefferies Financial Group
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Three Months Ended May 31, | Six Months Ended May 31, | |||||||
2022
|
2021
|
2022
|
2021
| |||||
Net income attributable to common shareholders (GAAP)
| $ | 114,014 | $ | 352,596 | $ | 441,461 | $ | 935,031 |
Intangible amortization and impairment expense, net of tax | 1,739 | 2,664 | 4,781 | 5,251 | ||||
Adjusted net income (non-GAAP) | $ | 115,753 | $ | 355,260 | $ | 446,242 | $ | 940,282 |
Annualized adjusted net income (non-GAAP) | $ | 463,012 | $ | 1,421,040 | $ | 892,484 | $ | 1,880,564 |
February 28, | November 30, | |||||||
2022 | 2021 | 2021 | 2020 | |||||
Shareholders' equity (GAAP) | $ | 10,490,300 | $ | 9,745,862 | $ | 10,553,755 | $ | 9,403,893 |
Less: Intangible assets, net and goodwill | (1,894,721) | (1,914,322) | (1,897,500) | (1,913,467) | ||||
Less: Deferred tax asset | (382,741) | (410,420) | (327,547) | (393,687) | ||||
Less: Weighted average quarter-to-date or year-to-date impact of cash dividends and share repurchases
| (162,339) | (36,759) | (378,907) | (142,189) | ||||
Adjusted tangible shareholders' equity (non-GAAP) | $ | 8,050,499 | $ | 7,384,361 | $ | 7,949,801 | $ | 6,954,550 |
Return on adjusted tangible equity | 5.8 | % | 19.2 | % | 11.2 | % | 27.0 | % |
December 31, 2017 | ||
Shareholders' equity (GAAP) | $ | 10,105,957 |
Intangible assets, net and goodwill | (2,463,180) | |
Tangible shareholders' equity (non-GAAP) | $ | 7,642,777 |
12 Jefferies Financial Group
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May 31, 2022 | ||
Book value (GAAP) | $ | 10,300,177 |
Redeemable convertible preferred shares convertible to common shares (1) | 125,000 | |
Stock options (2) | 120,089 | |
Intangible assets, net and goodwill | (1,885,043) | |
Adjusted tangible book value (non-GAAP) | $ | 8,660,223 |
Common shares outstanding (GAAP) | 232,321 | |
Restricted stock units ("RSUs") | 16,629 | |
Redeemable convertible preferred shares converted to common shares (1) | 4,441 | |
Stock options (2) | 5,061 | |
Other | 1,141 | |
Fully diluted shares outstanding (non-GAAP) (3) | 259,593 | |
Book value per share outstanding | $ | 44.34 |
Tangible book value per fully diluted share outstanding | $ | 33.36 |
(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 May 31, 2022 of 5,061,000 multiplied by the weighted average exercise price of $23.73 on May 31, 2022. Stock options added to fully diluted shares are equal to the total stock options outstanding on May 31, 2022. | |
(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.
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13 Jefferies Financial Group
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Jefferies Financial Group Inc. published this content on 27 June 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 27 June 2022 21:45:25 UTC.