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

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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