New York | 001-05721 | 13-2615557 | ||||||||||||||||||
(State or other jurisdiction of incorporation or organization) | (Commission File Number) | (I.R.S. Employer Identification No.) | ||||||||||||||||||
520 Madison Avenue | New York, | New York | 10022 | |||||||||||||||||
(Address of principal executive offices) | (Zip Code) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | |||||||||||||||
Common Shares, par value $1 per share | JEF | New York Stock Exchange | |||||||||||||||
4.850% Senior Notes Due 2027 | JEF 27A | New York Stock Exchange | |||||||||||||||
5.875% Senior Notes Due 2028 | JEF 28 | New York Stock Exchange | |||||||||||||||
2.750% Senior Notes Due 2032 | JEF 32A | New York Stock Exchange |
Exhibit No. | Description |
||||
99 | |||||
104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
JEFFERIES FINANCIAL GROUP INC. | ||||||||
By: | /s/ Michael J. Sharp | |||||||
Name: | Michael J. Sharp | |||||||
Title: | Executive Vice President and General Counsel |
FOR MORE INFORMATION
Jonathan Freedman 212.778.8913
|
1 Jefferies Financial Group |
2 Jefferies Financial Group |
(Dollars in thousands, except per share amounts) | Three Months Ended August 31, |
Nine Months Ended August 31, |
|||||||||||||||||||||||||||
2023 | 202214, 16 |
% Change |
2023 | 202214, 16 |
% Change |
||||||||||||||||||||||||
Net revenues: | |||||||||||||||||||||||||||||
Investment Banking and Capital Markets | $ | 1,168,231 | $ | 1,115,957 | 5% | $ | 3,446,382 | $ | 3,688,667 | (7)% | |||||||||||||||||||
Asset Management | 10,143 | 398,250 | (97)% | 47,699 | 854,423 | (94)% | |||||||||||||||||||||||
Other | 3,735 | (4,363) | N/M | 9,130 | (2,334) | N/M | |||||||||||||||||||||||
Net revenues | 1,182,109 | 1,509,844 | (22)% | 3,503,211 | 4,540,756 | (23)% | |||||||||||||||||||||||
Net earnings before income taxes | 91,071 | 301,850 | (70)% | 267,008 | 860,723 | (69)% | |||||||||||||||||||||||
Income tax expense | 37,124 | 105,909 | (65)% | 75,053 | 219,949 | (66)% | |||||||||||||||||||||||
Net earnings | 53,947 | 195,941 | (72)% | 191,955 | 640,774 | (70)% | |||||||||||||||||||||||
Net losses attributable to noncontrolling interests | (3,772) | (1,243) | 203% | (13,340) | (1,116) | N/M | |||||||||||||||||||||||
Net losses attributable to redeemable noncontrolling interests | — | (345) | (100)% | (454) | (1,241) | (63)% | |||||||||||||||||||||||
Preferred stock dividends | 6,300 | 2,070 | 204% | 8,316 | 6,211 | 34% | |||||||||||||||||||||||
Net earnings attributable to Jefferies Financial Group Inc. common shareholders | $ | 51,419 | $ | 195,459 | (74)% | $ | 197,433 | $ | 636,920 | (69)% | |||||||||||||||||||
Net earnings per common share attributable to Jefferies Financial Group Inc.: | |||||||||||||||||||||||||||||
Basic | $ | 0.22 | $ | 0.80 | (73)% | $ | 0.83 | $ | 2.54 | (67)% | |||||||||||||||||||
Diluted | $ | 0.22 | $ | 0.78 | (72)% | $ | 0.82 | $ | 2.48 | (67)% | |||||||||||||||||||
Weighted average common shares | 228,353 | 243,853 | 236,666 | 250,168 | |||||||||||||||||||||||||
Weighted average diluted common shares | 232,041 | 251,239 | 240,658 | 258,083 | |||||||||||||||||||||||||
Annualized return on adjusted tangible equity1 |
2.9% | 10.0% | 3.4% | 11.0% | |||||||||||||||||||||||||
Three Months Ended August 31, 2023 |
Nine Months Ended August 31, 2023 |
|||||||
•Net earnings attributable to common shareholders of $51 million, or $0.22 per diluted share.
•We had 210.4 million shares outstanding and 252.1 million shares outstanding on a fully diluted basis2 at August 31, 2023. Our book value per common share was $46.09 and tangible book value per fully diluted share3 was $31.51 at August 31, 2023.
•We currently have a $250 million authorization for future share repurchases.
•Effective tax rate of 40.8%.
|
•Net earnings attributable to common shareholders of $197 million, or $0.82 per diluted share.
•Repurchased 4.8 million shares of common stock for $165 million, at an average price of $34.74 per share, including 2.0 million shares of common stock in the open market for $61 million under our current Board of Directors authorization and 2.8 million shares of common stock for $104 million in connection with net-share settlements related to our equity compensation plans.
•Effective tax rate of 28.1%.
|
3 Jefferies Financial Group |
Three Months Ended August 31, 2023 |
Nine Months Ended August 31, 2023 |
|||||||
Investment Banking and Capital Markets |
Investment Banking and Capital Markets |
|||||||
•Investment Banking net revenues of $645 million were driven by improving market conditions resulting in solid performance in advisory, equity and debt underwriting.
•Underwriting net revenues of $265 million increased from the same quarter last year as inflationary and interest rate concerns have stabilized leading to a more active market. Advisory net revenues were lower than the same quarter last year consistent with a decline in global mergers and acquisitions volume.
•Capital Markets net revenues of $524 million were higher compared to the prior year quarter primarily due to stronger performance in Fixed Income as interest rates have stabilized and losses on certain mortgage inventory positions were not repeated form the prior year. Equities net revenues were largely consistent with the same quarter last year.
|
•Investment Banking net revenues were $1.71 billion as fewer merger and acquisition transactions were completed and lower average fees were earned per completed transaction.
•Advisory net revenues of $887 million and equity and debt underwriting net revenues of $709 million were lower than the same period last year consistent with a decline in industry-wide activity.
•Capital Markets net revenues of $1.73 billion were higher compared to the prior year period primarily driven by favorable results on stronger Fixed Income's performance attributable to more stable market conditions. Equities net revenues were largely consistent with the same period last year.
|
Asset Management |
Asset Management |
|||||||
•Asset Management net revenues of $10 million were significantly lower driven by strong results from investment return, though this was more than offset by a substantial decline in merchant banking net revenues due to the sale of Idaho Timber in August 2022 and spin-off of Vitesse Energy in January 2023, as the results of those operations are no longer included in our results. |
•Asset Management net revenues were $48 million, significantly lower than the period year period as the result of operations of Idaho Timber and Vitesse Energy are no longer included in the full period's results with their sale and spin-off, respectively, in August 2022 and January 2023. |
4 Jefferies Financial Group |
5 Jefferies Financial Group |
(Amounts in Thousands) (Unaudited) | Quarter Ended | ||||||||||||||||
August 31, 2023 |
May 31, 202316 |
August 31, 202214, 16 |
|||||||||||||||
Net revenues by source: |
|||||||||||||||||
Advisory | $ | 335,271 | $ | 254,157 | $ | 481,419 | |||||||||||
Equity underwriting | 154,211 | 148,429 | 150,972 | ||||||||||||||
Debt underwriting | 110,708 | 89,889 | 76,943 | ||||||||||||||
Total underwriting | 264,919 | 238,318 | 227,915 | ||||||||||||||
Other investment banking | 44,453 | 11,458 | (52,497) | ||||||||||||||
Total Investment Banking |
644,643 | 503,933 | 656,837 | ||||||||||||||
Equities | 268,015 | 278,691 | 275,641 | ||||||||||||||
Fixed income | 255,573 | 278,395 | 183,479 | ||||||||||||||
Total Capital Markets |
523,588 | 557,086 | 459,120 | ||||||||||||||
Total Investment Banking and Capital Markets Net revenues5 |
1,168,231 | 1,061,019 | 1,115,957 | ||||||||||||||
Asset management fees and revenues6 |
16,358 | 15,929 | 17,069 | ||||||||||||||
Investment return4 |
31,658 | 32,477 | (35,488) | ||||||||||||||
Merchant banking, inclusive of net interest | (25,145) | (66,180) | 430,009 | ||||||||||||||
Allocated net interest4 |
(12,728) | (13,125) | (13,340) | ||||||||||||||
Total Asset Management Net revenues |
10,143 | (30,899) | 398,250 | ||||||||||||||
Other | 3,735 | 7,490 | (4,363) | ||||||||||||||
Total Net revenues by source | $ | 1,182,109 | $ | 1,037,610 | $ | 1,509,844 | |||||||||||
Non-interest expenses: | |||||||||||||||||
Compensation and benefits | $ | 644,059 | $ | 575,868 | $ | 559,593 | |||||||||||
Floor brokerage and clearing fees | 91,226 | 96,592 | 84,686 | ||||||||||||||
Underwriting costs | 14,877 | 13,169 | 11,672 | ||||||||||||||
Technology and communications | 122,579 | 118,936 | 111,379 | ||||||||||||||
Occupancy and equipment rental | 27,711 | 24,395 | 26,589 | ||||||||||||||
Business development | 41,467 | 43,587 | 36,322 | ||||||||||||||
Professional services | 64,897 | 68,514 | 61,428 | ||||||||||||||
Depreciation and amortization |
25,288 | 25,310 | 43,187 | ||||||||||||||
Cost of sales | 1,618 | 2,362 | 123,436 | ||||||||||||||
Other | 57,316 | 50,958 | 149,702 | ||||||||||||||
Total Non-interest expenses |
$ | 1,091,038 | $ | 1,019,691 | $ | 1,207,994 | |||||||||||
6 Jefferies Financial Group |
(Amounts in Thousands) (Unaudited) | Nine Months Ended August 31, | ||||||||||
2023 | 202214, 16 |
||||||||||
Net revenues by source: |
|||||||||||
Advisory | $ | 886,606 | $ | 1,396,592 | |||||||
Equity underwriting | 428,085 | 429,507 | |||||||||
Debt underwriting | 280,772 | 429,142 | |||||||||
Total underwriting | 708,857 | 858,649 | |||||||||
Other investment banking | 115,957 | 68,888 | |||||||||
Total Investment Banking |
1,711,420 | 2,324,129 | |||||||||
Equities | 852,000 | 804,852 | |||||||||
Fixed income | 882,962 | 559,686 | |||||||||
Total Capital Markets |
1,734,962 | 1,364,538 | |||||||||
Total Investment Banking and Capital Markets Net revenues5 |
3,446,382 | 3,688,667 | |||||||||
Asset management fees and revenues6 |
74,983 | 75,687 | |||||||||
Investment return4 |
91,569 | (19) | |||||||||
Merchant banking, inclusive of net interest | (83,902) | 821,225 | |||||||||
Allocated net interest4 |
(34,951) | (42,470) | |||||||||
Total Asset Management Net revenues |
47,699 | 854,423 | |||||||||
Other | 9,130 | (2,334) | |||||||||
Total Net revenues by source | $ | 3,503,211 | $ | 4,540,756 | |||||||
Non-interest expenses: | |||||||||||
Compensation and benefits | $ | 1,922,985 | $ | 1,929,923 | |||||||
Floor brokerage and clearing fees | 268,292 | 262,663 | |||||||||
Underwriting costs | 41,253 | 32,991 | |||||||||
Technology and communications | 354,900 | 330,349 | |||||||||
Occupancy and equipment rental | 79,421 | 79,581 | |||||||||
Business development | 121,892 | 107,889 | |||||||||
Professional services | 195,572 | 169,936 | |||||||||
Depreciation and amortization |
83,890 | 129,431 | |||||||||
Cost of sales | 6,148 | 349,556 | |||||||||
Other | 161,850 | 287,714 | |||||||||
Total Non-interest expenses |
$ | 3,236,203 | $ | 3,680,033 | |||||||
7 Jefferies Financial Group |
(Unaudited) | Quarter Ended | ||||||||||||||||
August 31, 2023
|
May 31, 2023
|
August 31, 2022 |
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Other Data: | |||||||||||||||||
Number of trading days | 64 | 64 | 64 | ||||||||||||||
Number of trading loss days7 |
6 | 10 | 9 | ||||||||||||||
Average VaR (in millions)8 |
$ | 13.87 | $ | 15.14 | $ | 9.60 | |||||||||||
Nine Months Ended August 31, | |||||||||||||||||
2023 | 2022 |
||||||||||||||||
Other Data: | |||||||||||||||||
Number of trading days | 188 | 189 | |||||||||||||||
Number of trading loss days7 |
19 | 27 | |||||||||||||||
Average VaR (in millions)8 |
$ | 13.98 | $ | 11.18 |
(Amounts in Millions, Except Other Data) (Unaudited) | Quarter Ended | ||||||||||||||||
August 31, 2023
|
May 31, 2023
|
August 31, 202215 |
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Financial position9: |
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Total assets | $ | 56,045 | $ | 53,740 | $ | 51,477 | |||||||||||
Total assets less goodwill and intangible assets for the period15 |
54,173 | 51,867 | 49,603 | ||||||||||||||
Cash and cash equivalents | 8,817 | 8,005 | 9,478 | ||||||||||||||
Financial instruments owned15 |
22,805 | 21,002 | 18,776 | ||||||||||||||
Level 3 financial instruments owned10, 15 |
918 | 860 | 760 | ||||||||||||||
Goodwill and intangible assets | 1,872 | 1,873 | 1,874 | ||||||||||||||
Total equity | 9,765 | 9,765 | 10,360 | ||||||||||||||
Total shareholders' equity | 9,699 | 9,696 | 10,293 | ||||||||||||||
Tangible shareholders' equity11 |
7,827 | 7,823 | 8,418 | ||||||||||||||
Other data and financial ratios: | |||||||||||||||||
Leverage ratio9, 12, 15 |
5.7 | 5.5 | 5.0 | ||||||||||||||
Tangible gross leverage ratio9, 13, 15 |
6.9 | 6.6 | 5.9 | ||||||||||||||
Number of employees, at period end | 5,505 | 5,335 | 5,347 |
8 Jefferies Financial Group |
Three Months Ended August 31, 2023 |
Nine Months Ended August 31, 2023 |
|||||||||||||
Numerator for earnings per common share: | ||||||||||||||
Net earnings attributable to Jefferies Financial Group Inc. | $ | 57,719 | $ | 203,733 | ||||||||||
Allocation of earnings to participating securities | (6,369) | (7,344) | ||||||||||||
Net earnings attributable to Jefferies Financial Group Inc. common shareholders for basic earnings per share | 51,350 | 196,389 | ||||||||||||
Net earnings attributable to Jefferies Financial Group Inc. common shareholders for diluted earnings per share | 51,350 | 196,389 | ||||||||||||
Denominator for earnings per common share: | ||||||||||||||
Weighted average common shares outstanding | 218,411 | 226,265 | ||||||||||||
Weighted average shares of restricted stock outstanding with future service required | (1,793) | (1,923) | ||||||||||||
Weighted average restricted stock units outstanding with no future service required | 11,735 | 12,324 | ||||||||||||
Denominator for basic earnings per common share – weighted average shares | 228,353 | 236,666 | ||||||||||||
Stock options and other share based awards | 2,047 | 2,064 | ||||||||||||
Senior executive compensation plan restricted stock unit awards | 1,641 | 1,928 | ||||||||||||
Denominator for diluted earnings per common share | 232,041 | 240,658 | ||||||||||||
Net earnings per common share attributable to Jefferies Financial Group Inc.: | ||||||||||||||
Basic | $ | 0.22 | $ | 0.83 | ||||||||||
Diluted | $ | 0.22 | $ | 0.82 |
9 Jefferies Financial Group |
10 Jefferies Financial Group |
Three Months Ended August 31, |
Nine Months Ended August 31, |
|||||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||
Net earnings attributable to Jefferies Financial Group Inc. common shareholders (GAAP) | $ | 51,419 | $ | 195,459 | $ | 197,433 | $ | 636,920 | ||||||||||||||||||
Intangible amortization and impairment expense, net of tax | 1,480 | 1,638 | 4,700 | 6,350 | ||||||||||||||||||||||
Adjusted net earnings (non-GAAP) | $ | 52,899 | $ | 197,097 | $ | 202,133 | $ | 643,270 | ||||||||||||||||||
Annualized adjusted net earnings (non-GAAP) | $ | 211,596 | $ | 788,388 | $ | 269,511 | $ | 857,693 | ||||||||||||||||||
May 31, | November 30, | |||||||||||||||||||||||||
2023 | 2022 | 2022 | 2021 | |||||||||||||||||||||||
Shareholders' equity (GAAP) | $ | 9,695,655 | $ | 10,300,177 | $ | 10,232,845 | $ | 10,553,755 | ||||||||||||||||||
Less: Intangible assets, net and goodwill | (1,873,123) | (1,885,043) | (1,875,576) | (1,897,500) | ||||||||||||||||||||||
Less: Deferred tax asset | (502,442) | (401,268) | (387,862) | (327,547) | ||||||||||||||||||||||
Less: Weighted average impact of dividends and share repurchases |
(49,481) | (93,106) | (147,972) | (539,674) | ||||||||||||||||||||||
Adjusted tangible shareholders' equity (non-GAAP) | $ | 7,270,609 | $ | 7,920,760 | $ | 7,821,435 | $ | 7,789,034 | ||||||||||||||||||
Annualized return on adjusted tangible equity (non-GAAP) | 2.9 | % | 10.0 | % | 3.4 | % | 11.0 | % | ||||||||||||||||||
11 Jefferies Financial Group |
August 31, 2023 | |||||||||||
Book value (GAAP) | $ | 9,698,847 | |||||||||
Stock options(1) |
114,939 | ||||||||||
Intangible assets, net and goodwill | (1,872,144) | ||||||||||
Adjusted tangible book value (non-GAAP) | $ | 7,941,642 | |||||||||
Common shares outstanding (GAAP) | 210,428 | ||||||||||
Preferred shares | 21,000 | ||||||||||
Restricted stock units ("RSUs") | 14,221 | ||||||||||
Stock options(1) |
5,065 | ||||||||||
Other | 1,350 | ||||||||||
Fully diluted shares outstanding (non-GAAP)(2) |
252,064 | ||||||||||
Book value per common share outstanding | $ | 46.09 | |||||||||
Tangible book value per fully diluted share outstanding (non-GAAP) | $ | 31.51 | |||||||||
(1) |
Stock options added to book value are equal to the total number of stock options outstanding as of August 31, 2023 of 5,064,740 multiplied by the weighted average exercise price of $22.69 on August 31, 2023. Stock options added to fully diluted shares are equal to the total stock options outstanding on August 31, 2023. |
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(2) |
Fully diluted shares outstanding include vested and unvested RSUs as well as the target number of RSUs issuable under the senior executive compensation plans until the performance period is complete. Fully diluted shares outstanding also include all stock options and the impact of mandatorily convertible preferred shares if-converted to common shares. |
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12 Jefferies Financial Group |