Jefferies Announces Second Quarter 2019 Financial Results

NEW YORK–(BUSINESS WIRE)–Jefferies Financial Group Inc. (NYSE:JEF) today announced its financial results for the three and six month periods ended May 31, 2019.

Highlights for the three months ended May 31, 2019:

  • Net income attributable to Jefferies Financial Group common shareholders of $671 million, or $2.14 per diluted share, including the impact of a nonrecurring tax benefit of $545 million; adjusted net income of $126 million1, or $0.41 per diluted share1
  • Jefferies Group (Investment Banking, Capital Markets and Asset Management) pre-tax income of $155 million and net earnings of $110 million

    • Total Net Revenues of $902 million
    • Investment Banking Net Revenues of $448 million
    • Total Equities and Fixed Income Net Revenues of $379 million
    • Asset Management Revenues (before Allocated net interest2) of $53 million
  • Merchant Banking pre-tax income of $51 million, reflecting strong performance from National Beef and Vitesse, offset by mark-to-market unrealized decreases in the values of several of our investments in public companies
  • Repurchase of 7.8 million shares for $150 million, or an average price of $19.33 per share
  • $336 million (based on July 2 closing stock price) remaining to be purchased under previously authorized share buyback
  • Jefferies Financial Group had parent company liquidity of $1.3 billion at May 31, 2019

Highlights for the six months ended May 31, 2019:

  • Net income attributable to Jefferies Financial Group common shareholders of $716 million, or $2.25 per diluted share, including the impact of a nonrecurring tax benefit of $545 million; adjusted net income of $171 million1, or $0.54 per diluted share1
  • Jefferies Group (Investment Banking, Capital Markets and Asset Management) pre-tax income of $218 million and net earnings of $156 million

    • Total Net Revenues of $1,588 million
    • Investment Banking Net Revenues of $726 million, below-normal due to the impact of market conditions in December and the shutdown of the U.S. Government in December and January
    • Total Equities and Fixed Income Net Revenues of $751 million
    • Asset Management Revenues (before Allocated net interest2) of $92 million
  • Merchant Banking pre-tax income of $71 million, reflecting strong performance from National Beef and Vitesse, offset by mark-to-market unrealized decreases in the values of several of our investments in public companies
  • Repurchase of 17.4 million shares for $344 million, or an average price of $19.86 per share

Rich Handler, our CEO, and Brian Friedman, our President, said:

“Jefferies Group, our financial services business, produced solid and promising performance in the second quarter in Investment Banking, Capital Markets and Asset Management. Overall Investment Banking results returned to more normal levels, although our Investment Banking advisory revenues were held back by the lag effect resulting from capital markets conditions in December and the U.S. government shutdown in December and January. We continue to take market share in our Equities business and posted solid results in our Fixed Income business on the back of strength in our credit businesses. Good results for the second quarter and first half of the year in our Asset Management business suggest we are making continued progress toward building this business. Return on equity for Jefferies Group was 7.1% and return on tangible equity3 was 10.2%.

“In the third quarter, we believe Investment Banking will continue to deliver solid results (subject to market conditions), as our transaction backlog is robust and we are seeing positive trends in both the M&A and leveraged finance markets. Additionally, we are optimistic regarding the increasing productivity of managing directors we hired during the last several years. In particular, we are expecting Investment Banking revenue growth in both the U.S. and Europe from a large number of our recently hired coverage managing directors in our Industrials, Technology and Consumer groups, as they continue to gain traction. We currently have 865 investment banking professionals globally, of which 212 are managing directors. The quality of our brand, human capital and market position has never been stronger.

“In Equities, we are realizing market share gains globally driven by our innovative electronic trading capabilities. We are also experiencing strong momentum in our prime services platform, with continued opportunity to grow our market share with emerging hedge fund managers. In addition, we are currently working to expand our Equities footprint by hiring additional capable research, sales and trading professionals, particularly in Japan, Hong Kong and Australia.

“In Fixed Income, we continue to heighten our focus and effort. We have just elevated Rob Lynn to become our Global Head of Fixed Income Sales and asked Jon Bass to lead our Fixed Income Senior Relationship coverage of our priority and focus clients. With Fred Jallot joining Jefferies earlier this year as Head of European Fixed Income in London, we are seeking to align more closely our European Fixed Income effort with our U.S. business, emphasizing the high yield, distressed and emerging markets areas, as well as structured credit. We recently combined our macro businesses across Fixed Income and Equities into a Cross Asset Macro unit under the leadership of Pete Seccia. Layla Royer and Andrew Lynch will co-lead the Macro distribution effort.

“Solid returns in our Asset Management businesses during the second quarter were driven by our two multi-manager platforms (Weiss and Schonfeld), as well as our European long-short and our energy-focused strategies. We announced the launch of an investment platform with Craig Schortzmann and Sean Gallary to acquire stakes in general partners of hedge funds and private equity firms. During the period, we also partnered with Ross Berger, an experienced executive, to launch a trade finance asset manager, and are onboarding this week an experienced team in energy and energy-related ESG strategies. We also continued to add to our Asset Management marketing efforts, hiring a new Head of EMEA and a Head of Consultant Relations. Over the first six months of this fiscal year, Asset Management generated revenues of $92 million (before allocated net interest2) on our allocated capital of about $1 billion. We believe that these results represent a solid foundation on which we can continue to build and that our long-term opportunity is driven by the combination of excellent investment management capability, strong marketing, and a high quality and scalable operating platform.

“Our Merchant Banking portfolio had a carrying value of $3.4 billion at May 31, 2019. We estimate its fair market value4 at May 31, 2019 was $4.4 billion, or $1.0 billion more than its carrying value. We are focused on driving higher the return on tangible equity in our core business, as well as continuing to re-deploy capital and cash flow from operations and our merchant banking portfolio into businesses yielding more consistent earnings streams.

“During the second quarter, we repurchased 7.8 million shares for $150 million, or an average price of $19.33 per share. So far this fiscal year, we have repurchased 17.4 million Jefferies shares for $344 million, or an average of $19.86 per share. Since January 1, 2018, we have repurchased an aggregate of 67 million shares at an average price of $22.08 per share. Combining share buybacks with the dividends paid from January 1, 2018 through May 31, 2019, we returned to our shareholders an aggregate of $1.7 billion, or 17% of our common shareholders’ equity (23% of our tangible equity5) as of the beginning of this seventeen month period. Our number of common shares outstanding declined by 18% from 356 million at January 1, 2018 to 291 million at May 31, 2019. Our fully diluted shares outstanding6 declined by 16% from 373 million at January 1, 2018 to 312 million at May 31, 2019. Even after these buybacks and continuing investment in our business, we ended the second quarter with parent company liquidity of $1.3 billion.

“We will consider repurchasing our shares whenever our stock price is at an attractive discount to intrinsic value, always keeping in mind our relationship with our bondholders and rating agencies. We are pleased to have been recently upgraded by Moody’s. We are currently authorized to repurchase up to an additional $336 million (based on July 2 closing stock price) worth of shares, including the shares that were used to purchase the remaining 30% interest in HomeFed, which closed on July 1.

“During the second quarter, in connection with the closing of our corporate available for sale portfolio, we realized a non-cash tax benefit of $545 million. This tax benefit was generated primarily through activity during 2008-2010 and since then has remained an unrealized balance within equity until the liquidation of the portfolio. This realization did not impact total equity, as the increase in retained earnings was offset by a corresponding decrease in accumulated other comprehensive income.”

Amounts herein pertaining to May 31, 2019 represent a preliminary estimate as of the date of this earnings release and may be revised upon filing our Quarterly Report on Form 10-Q with the Securities and Exchange Commission (“SEC”). More information on our results of operations for the three and six month periods ended May 31, 2019 will be provided upon filing our Quarterly Report on Form 10-Q with the SEC. Jefferies expects to file its Form 10-Q on or about July 9, 2019.

This press release contains “forward-looking statements” within the meaning of the safe harbor provisions of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements 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,” 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 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.

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).

 

 

 

 

1

Jefferies Financial Group adjusted net income, a non-GAAP measure, is defined as Jefferies Financial Group’s net income less AOCI nonrecurring tax benefit. Jefferies Financial Group adjusted diluted earnings per share, a non-GAAP measure, is defined as Jefferies Financial Group’s diluted earnings per share less AOCI non-recurring tax benefit. Refer to schedule on page 15 for reconciliation to U.S. GAAP amounts.

2

Allocated net interest represents the allocation of Jefferies Group LLC’s long-term debt interest expense to Jefferies Group LLC’s Asset Management reportable segment, net of interest income on Jefferies Group LLC’s Cash and cash equivalents and other sources of liquidity, which allocation is consistent with Jefferies Group LLC’s policy of allocating such items to its business lines. Refer to Jefferies Group LLC’s summary of Net Revenues by Source on pages 10 and 11.

3

Return on tangible equity, a non-GAAP financial measure, equals Jefferies Group LLC’s second quarter of 2019 annualized net earnings divided by tangible Jefferies Group LLC member’s equity (a non-GAAP financial measure). Tangible Jefferies Group LLC member’s equity of $4,326 million at February 28, 2019 is a non-GAAP measure and equals Jefferies Group LLC member’s equity of $6,151 million less goodwill and identifiable intangible assets of $1,826 million.

4

The estimated fair value of our merchant banking portfolio is a non-GAAP measure and equals our merchant banking carrying value plus estimated fair value adjustments. Refer to schedule on page 14 for reconciliation to U.S. GAAP amounts.

5

Tangible equity of $7,643 million at December 31, 2017 is a non-GAAP measure and equals Jefferies Financial Group’s common shareholders’ equity of $10,106 million less Intangible assets, net and goodwill of $2,463 million.

6

Fully diluted shares outstanding, a non-GAAP measure, is defined as common shares outstanding plus restricted stock units and other diluted shares. Refer to schedule on page 15 for reconciliation to U.S. GAAP amounts.

Summary for Jefferies Financial Group Inc. and Subsidiaries

(In thousands, except per share amounts)

(Unaudited)

 

 

For the Three Months Ended

 

For the Six Months Ended

May 31,

2019

 

June 30,

2018

 

May 31,

2019

 

June 30,

2018

 

 

 

 

 

 

 

 

Net revenues

$

1,101,657

 

 

$

911,159

 

 

$

1,930,100

 

 

$

1,806,594

 

 

 

 

 

 

 

 

 

Income from continuing operations before income taxes and income related to associated companies

$

161,309

 

 

$

4,162

 

 

$

183,313

 

 

$

9,825

 

Income related to associated companies

22,170

 

 

33,353

 

 

49,483

 

 

65,453

 

Income from continuing operations before income taxes

183,479

 

 

37,515

 

 

232,796

 

 

75,278

 

Income tax provision (benefit)

(488,797

)

 

9,598

 

 

(486,495

)

 

(38,831

)

Income from continuing operations

672,276

 

 

27,917

 

 

719,291

 

 

114,109

 

Income from discontinued operations, net of income tax provision of $0, $31,111, $0 and $47,045

 

 

77,106

 

 

 

 

130,063

 

Gain on disposal of discontinued operations, net of income tax provision of $0, $229,553, $0 and $229,553

 

 

643,921

 

 

 

 

643,921

 

Net income

672,276

 

 

748,944

 

 

719,291

 

 

888,093

 

Net (income) loss attributable to the noncontrolling interests

191

 

 

(136

)

 

(875

)

 

1,208

 

Net income attributable to the redeemable noncontrolling interests

(427

)

 

(22,108

)

 

(289

)

 

(36,904

)

Preferred stock dividends

(1,276

)

 

(1,171

)

 

(2,552

)

 

(2,343

)

Net income attributable to Jefferies Financial Group Inc. common shareholders

$

670,764

 

 

$

725,529

 

 

$

715,575

 

 

$

850,054

 

 

 

 

 

 

 

 

 

Basic earnings per common share attributable to Jefferies Financial Group Inc. common shareholders:

 

 

 

 

 

 

 

Income from continuing operations

$

2.17

 

 

$

0.08

 

 

$

2.29

 

 

$

0.31

 

Income from discontinued operations

 

 

0.15

 

 

 

 

0.26

 

Gain on disposal of discontinued operations

 

 

1.82

 

 

 

 

1.79

 

Net income

$

2.17

 

 

$

2.05

 

 

$

2.29

 

 

$

2.36

 

 

 

 

 

 

 

 

 

Number of shares in calculation

307,010

 

 

352,049

 

 

311,108

 

 

359,237

 

 

 

 

 

 

 

 

 

Diluted earnings per common share attributable to Jefferies Financial Group Inc. common shareholders:

 

 

 

 

 

 

 

Income from continuing operations

$

2.14

 

 

$

0.08

 

 

$

2.25

 

 

$

0.31

 

Income from discontinued operations

 

 

0.15

 

 

 

 

0.25

 

Gain on disposal of discontinued operations

 

 

1.80

 

 

 

 

1.77

 

Net income

$

2.14

 

 

$

2.03

 

 

$

2.25

 

 

$

2.33

 

 

 

 

 

 

 

 

 

Number of shares in calculation

312,527

 

 

356,075

 

 

317,736

 

 

362,685

 

A summary of results for the three months ended May 31, 2019 is as follows (in thousands):

 

 

Jefferies

Group

 

Merchant

Banking

 

Corporate

 

Parent

Company

Interest

 

Consolidation

Adjustments

 

Total

Net revenues

$

901,851

 

 

$

187,324

 

 

$

8,974

 

 

$

 

 

$

3,508

 

 

$

1,101,657

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

477,885

 

 

19,914

 

 

12,761

 

 

 

 

 

 

510,560

 

Cost of sales

 

 

80,415

 

 

 

 

 

 

 

 

80,415

 

Floor brokerage and clearing fees

62,474

 

 

 

 

 

 

 

 

(2,087

)

 

60,387

 

Interest expense

 

 

8,372

 

 

 

 

14,766

 

 

 

 

23,138

 

Depreciation and amortization

18,968

 

 

16,951

 

 

867

 

 

 

 

 

 

36,786

 

Selling, general and other expenses

187,386

 

 

32,618

 

 

9,231

 

 

 

 

(173

)

 

229,062

 

Total expenses

746,713

 

 

158,270

 

 

22,859

 

 

14,766

 

 

(2,260

)

 

940,348

 

Income (loss) from continuing operations before income taxes and income related to associated companies

155,138

 

 

29,054

 

 

(13,885

)

 

(14,766

)

 

5,768

 

 

161,309

 

Income related to associated companies

 

 

22,170

 

 

 

 

 

 

 

 

22,170

 

Income (loss) from continuing operations before income taxes

$

155,138

 

 

$

51,224

 

 

$

(13,885

)

 

$

(14,766

)

 

$

5,768

 

 

183,479

 

Income tax benefit from continuing operations

 

 

 

 

 

 

 

 

 

 

(488,797

)

Net income

 

 

 

 

 

 

 

 

 

 

$

672,276

 

A summary of results for the three months ended June 30, 2018 is as follows (in thousands):

 

 

Jefferies

Group

 

Merchant

Banking

 

Corporate

 

Parent

Company

Interest

 

Consolidation

Adjustments

 

Total

Net revenues

$

822,557

 

 

$

86,417

 

 

$

2,994

 

 

$

 

 

$

(809

)

 

$

911,159

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

444,094

 

 

20,101

 

 

14,320

 

 

 

 

 

 

478,515

 

Cost of sales

 

 

90,690

 

 

 

 

 

 

 

 

90,690

 

Floor brokerage and clearing fees

46,244

 

 

 

 

 

 

 

 

(1,198

)

 

45,046

 

Interest expense

 

 

9,529

 

 

 

 

14,750

 

 

 

 

24,279

 

Depreciation and amortization

17,288

 

 

13,740

 

 

877

 

 

 

 

 

 

31,905

 

Selling, general and other expenses

193,066

 

 

35,768

 

 

9,012

 

 

 

 

(1,284

)

 

236,562

 

Total expenses

700,692

 

 

169,828

 

 

24,209

 

 

14,750

 

 

(2,482

)

 

906,997

 

Income (loss) from continuing operations before income taxes and income related to associated companies

121,865

 

 

(83,411

)

 

(21,215

)

 

(14,750

)

 

1,673

 

 

4,162

 

Income related to associated companies

 

 

33,353

 

 

 

 

 

 

 

 

33,353

 

Income (loss) from continuing operations before income taxes

$

121,865

 

 

$

(50,058

)

 

$

(21,215

)

 

$

(14,750

)

 

$

1,673

 

 

37,515

 

Income tax provision from continuing operations

 

 

 

 

 

 

 

 

 

 

9,598

 

Income from discontinued operations, net of income tax provision

 

 

 

 

 

 

 

 

 

 

77,106

 

Gain on disposal of discontinued operations, net of income tax provision

 

 

 

 

 

 

 

 

 

 

643,921

 

Net income

 

 

 

 

 

 

 

 

 

 

$

748,944

 

A summary of results for the six months ended May 31, 2019 is as follows (in thousands):

 

 

Jefferies

Group

 

Merchant

Banking

 

Corporate

 

Parent

Company

Interest

 

Consolidation

Adjustments

 

Total

Net revenues

$

1,587,569

 

 

$

323,662

 

 

$

13,167

 

 

$

 

 

$

5,702

 

 

$

1,930,100

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

849,570

 

 

40,300

 

 

30,282

 

 

 

 

 

 

920,152

 

Cost of sales

 

 

147,336

 

 

 

 

 

 

 

 

147,336

 

Floor brokerage and clearing fees

114,451

 

 

 

 

 

 

 

 

(2,196

)

 

112,255

 

Interest expense

 

 

16,628

 

 

 

 

29,528

 

 

 

 

46,156

 

Depreciation and amortization

36,630

 

 

32,368

 

 

1,722

 

 

 

 

 

 

70,720

 

Selling, general and other expenses

369,195

 

 

65,184

 

 

16,391

 

 

 

 

(602

)

 

450,168

 

Total expenses

1,369,846

 

 

301,816

 

 

48,395

 

 

29,528

 

 

(2,798

)

 

1,746,787

 

Income (loss) from continuing operations before income taxes and income related to associated companies

217,723

 

 

21,846

 

 

(35,228

)

 

(29,528

)

 

8,500

 

 

183,313

 

Income related to associated companies

 

 

49,483

 

 

 

 

 

 

 

 

49,483

 

Income (loss) from continuing operations before income taxes

$

217,723

 

 

$

71,329

 

 

$

(35,228

)

 

$

(29,528

)

 

$

8,500

 

 

232,796

 

Income tax benefit from continuing operations

 

 

 

 

 

 

 

 

 

 

(486,495

)

Net income

 

 

 

 

 

 

 

 

 

 

$

719,291

 

A summary of results for the six months ended June 30, 2018 is as follows (in thousands):

 

 

Jefferies

Group

 

Merchant

Banking

 

Corporate

 

Parent

Company

Interest

 

Consolidation

Adjustments

 

Total

Net revenues

$

1,643,803

 

 

$

160,318

 

 

$

6,061

 

 

$

 

 

$

(3,588

)

 

$

1,806,594

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

899,727

 

 

40,043

 

 

29,277

 

 

 

 

(873

)

 

968,174

 

Cost of sales

 

 

172,625

 

 

 

 

 

 

 

 

172,625

 

Floor brokerage and clearing fees

90,063

 

 

 

 

 

 

 

 

(2,841

)

 

87,222

 

Interest expense

 

 

16,281

 

 

 

 

29,496

 

 

 

 

45,777

 

Depreciation and amortization

33,654

 

 

24,664

 

 

1,747

 

 

 

 

 

 

60,065

 

Selling, general and other expenses

375,756

 

 

71,473

 

 

17,777

 

 

 

 

(2,100

)

 

462,906

 

Total expenses

1,399,200

 

 

325,086

 

 

48,801

 

 

29,496

 

 

(5,814

)

 

1,796,769

 

Income (loss) from continuing operations before income taxes and income related to associated companies

244,603

 

 

(164,768

)

 

(42,740

)

 

(29,496

)

 

2,226

 

 

9,825

 

Income related to associated companies

 

 

65,453

 

 

 

 

 

 

 

 

65,453

 

Income (loss) from continuing operations before income taxes

$

244,603

 

 

$

(99,315

)

 

$

(42,740

)

 

$

(29,496

)

 

$

2,226

 

 

75,278

 

Income tax benefit from continuing operations

 

 

 

 

 

 

 

 

 

 

(38,831

)

Income from discontinued operations, net of income tax provision

 

 

 

 

 

 

 

 

 

 

130,063

 

Gain on disposal of discontinued operations, net of income tax provision

 

 

 

 

 

 

 

 

 

 

643,921

 

Net income

 

 

 

 

 

 

 

 

 

 

$

888,093

 

The following financial tables provide information for the results of Jefferies Group LLC and should be read in conjunction with Jefferies Group LLC’s Quarterly Report on Form 10-Q for the quarter ended February 28, 2019 and Annual Report on Form 10-K for the year ended November 30, 2018. Amounts herein pertaining to May 31, 2019 represent a preliminary estimate as of the date of this earnings release and may be revised in Jefferies Group LLC’s Quarterly Report on Form 10-Q for the quarter ended May 31, 2019.

Jefferies Group LLC and Subsidiaries

Consolidated Statements of Earnings

(Amounts in Thousands)

(Unaudited)

 

 

 

 

 

Quarter Ended

 

May 31, 2019

February 28, 2019

May 31, 2018

Revenues:

 

 

 

Commissions and other fees

$

159,773

 

$

147,326

 

$

158,104

 

Principal transactions

248,831

 

234,298

 

137,802

 

Investment banking

430,087

 

285,596

 

500,297

 

Asset management fees

4,550

 

6,669

 

6,016

 

Interest

418,451

 

360,975

 

307,327

 

Other

52,801

 

20,008

 

47,263

 

Total revenues

1,314,493

 

1,054,872

 

1,156,809

 

Interest expense

412,642

 

369,154

 

334,252

 

Net revenues

901,851

 

685,718

 

822,557

 

 

 

 

 

Non-interest expenses:

 

 

 

Compensation and benefits

477,885

 

371,685

 

444,094

 

 

 

 

 

Non-compensation expenses:

 

 

 

Floor brokerage and clearing fees

62,474

 

51,977

 

46,244

 

Technology and communications

81,645

 

79,170

 

76,381

 

Occupancy and equipment rental

29,748

 

28,539

 

24,993

 

Business development

36,349

 

30,555

 

42,393

 

Professional services

38,066

 

36,927

 

35,991

 

Underwriting costs

12,823

 

8,575

 

13,029

 

Other

7,723

 

15,705

 

17,567

 

Total non-compensation expenses

268,828

 

251,448

 

256,598

 

Total non-interest expenses

746,713

 

623,133

 

700,692

 

Earnings before income taxes

155,138

 

62,585

 

121,865

 

Income tax expense

45,319

 

16,220

 

23,857

 

Net earnings

109,819

 

46,365

 

98,008

 

Net earnings (loss) attributable to noncontrolling interests

(101

)

384

 

4

 

Net earnings attributable to Jefferies Group LLC

$

109,920

 

$

45,981

 

$

98,004

 

 

 

 

 

Pre-tax operating margin

17.2

%

9.1

%

14.8

%

Effective tax rate

29.2

%

25.9

%

19.6

%

Jefferies Group LLC and Subsidiaries

Consolidated Statements of Earnings

(Amounts in Thousands)

(Unaudited)

 

 

 

 

Six Months Ended

 

May 31, 2019

May 31, 2018

Revenues:

 

 

Commissions and other fees

$

307,099

 

$

306,006

 

Principal transactions

483,129

 

355,275

 

Investment banking

715,683

 

940,288

 

Asset management fees

11,219

 

10,946

 

Interest

779,426

 

565,143

 

Other

72,809

 

65,746

 

Total revenues

2,369,365

 

2,243,404

 

Interest expense

781,796

 

599,601

 

Net revenues

1,587,569

 

1,643,803

 

 

 

 

Non-interest expenses:

 

 

Compensation and benefits

849,570

 

899,727

 

 

 

 

Non-compensation expenses:

 

 

Floor brokerage and clearing fees

114,451

 

90,063

 

Technology and communications

160,815

 

145,458

 

Occupancy and equipment rental

58,287

 

49,584

 

Business development

66,904

 

84,500

 

Professional services

74,993

 

66,399

 

Underwriting costs

21,398

 

27,304

 

Other

23,428

 

36,165

 

Total non-compensation expenses

520,276

 

499,473

 

Total non-interest expenses

1,369,846

 

1,399,200

 

Earnings before income taxes

217,723

 

244,603

 

Income tax expense

61,539

 

207,414

 

Net earnings

156,184

 

37,189

 

Net earnings attributable to noncontrolling interests

283

 

3

 

Net earnings attributable to Jefferies Group LLC

$

155,901

 

$

37,186

 

 

 

 

Pre-tax operating margin

13.7

%

14.9

%

Effective tax rate (1)

28.3

%

84.8

%

Contacts

Teresa S. Gendron

Chief Financial Officer

Jefferies Financial Group Inc.

Tel. (212) 460-1932

Peregrine C. Broadbent

Chief Financial Officer

Jefferies Group LLC

Tel. (212) 284-2338

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