Jefferies Announces First Quarter 2025 Financial Results
Q1 Financial Highlights |
||||||
$ in thousands, except per share amounts |
Quarter End |
|||||
|
|
1Q25 |
|
|
1Q24 |
|
Net earnings attributable to common shareholders |
$ |
127,793 |
|
$ |
149,641 |
|
Diluted earnings per common share from continuing operations |
$ |
0.57 |
|
$ |
0.69 |
|
Return on adjusted tangible shareholders' equity from continuing operations1 |
|
8.0 |
% |
|
9.8 |
% |
Total net revenues |
$ |
1,593,019 |
|
$ |
1,738,203 |
|
Investment banking net revenues14 |
$ |
700,692 |
|
$ |
727,010 |
|
Capital markets net revenues14 |
$ |
698,284 |
|
$ |
724,278 |
|
Asset management net revenues |
$ |
191,715 |
|
$ |
273,383 |
|
Pre-tax earnings from continuing operations |
$ |
151,065 |
|
$ |
220,242 |
|
Book value per common share |
$ |
49.48 |
|
$ |
46.13 |
|
Adjusted tangible book value per fully diluted share3 |
$ |
32.57 |
|
$ |
30.89 |
|
Quarterly Cash Dividend
The Jefferies Board of Directors declared a quarterly cash dividend equal to
Management Comments
"Our first quarter results reflect strength in Advisory, Debt underwriting and Equities offset by a meaningful decline in asset management investment return compared to the prior year quarter. The capital markets have become increasingly more challenging due to the uncertainties that have arisen around
"We remain very confident about our strategy, our team and our long-term growth opportunities across our global businesses and we will navigate this period of uncertainty the way we always do, by focusing on our clients and helping them address their challenges and opportunities, while watching our risk, maintaining record liquidity and striving to gain market share across our firm.
"Investment Banking net revenues from Advisory, Equity underwriting and Debt underwriting totaling
"Capital Markets net revenues of
"Asset Management fees and investment return revenues of
"We would also like to thank our clients and colleagues who came together in January as part of our Doing Good Global Trading Day, to proudly contribute
Richard Handler, CEO, and Brian Friedman, President
Financial Summary (Unaudited) |
|||||||||
$ in thousands |
Three Months Ended |
||||||||
|
February 28,
|
November 30,
|
February 29,
|
||||||
Net revenues by source: |
|
|
|
||||||
Advisory |
$ |
397,780 |
|
$ |
596,707 |
|
$ |
338,567 |
|
Equity underwriting |
|
128,520 |
|
|
191,218 |
|
|
209,303 |
|
Debt underwriting |
|
199,362 |
|
|
171,456 |
|
|
129,194 |
|
Other investment banking14 |
|
(24,970 |
) |
|
27,443 |
|
|
49,946 |
|
Total Investment Banking |
|
700,692 |
|
|
986,824 |
|
|
727,010 |
|
Equities14 |
|
409,058 |
|
|
410,768 |
|
|
371,800 |
|
Fixed income |
|
289,226 |
|
|
240,922 |
|
|
352,478 |
|
Total Capital Markets |
|
698,284 |
|
|
651,690 |
|
|
724,278 |
|
Total Investment Banking and Capital Markets Net revenues5 |
|
1,398,976 |
|
|
1,638,514 |
|
|
1,451,288 |
|
Asset management fees and revenues6 |
|
88,630 |
|
|
13,752 |
|
|
59,657 |
|
Investment return |
|
(5,634 |
) |
|
101,762 |
|
|
117,640 |
|
Allocated net interest4 |
|
(17,221 |
) |
|
(15,104 |
) |
|
(15,012 |
) |
Other investments, inclusive of net interest13 |
|
125,940 |
|
|
214,340 |
|
|
111,098 |
|
Total Asset Management Net revenues |
|
191,715 |
|
|
314,750 |
|
|
273,383 |
|
Other |
|
2,328 |
|
|
3,338 |
|
|
13,532 |
|
Total Net revenues by source |
$ |
1,593,019 |
|
$ |
1,956,602 |
|
$ |
1,738,203 |
|
|
|
|
|
||||||
Non-interest expenses: |
|
|
|
||||||
Compensation and benefits |
$ |
841,127 |
|
$ |
981,626 |
|
$ |
926,871 |
|
Compensation ratio15 |
|
52.8 |
% |
|
50.2 |
% |
|
53.3 |
% |
Non-compensation expenses |
$ |
600,827 |
|
$ |
670,114 |
|
$ |
591,090 |
|
Non-compensation ratio15 |
|
37.7 |
% |
|
34.2 |
% |
|
34.0 |
% |
Total Non-interest expenses |
$ |
1,441,954 |
|
$ |
1,651,740 |
|
$ |
1,517,961 |
|
|
|
|
|
||||||
Net earnings from continuing operations before income taxes |
$ |
151,065 |
|
$ |
304,862 |
|
$ |
220,242 |
|
Income tax expense |
$ |
14,216 |
|
$ |
86,117 |
|
$ |
55,959 |
|
Income tax rate |
|
9.4 |
% |
|
28.2 |
% |
|
25.4 |
% |
Net earnings from continuing operations |
$ |
136,849 |
|
$ |
218,745 |
|
$ |
164,283 |
|
Net earnings (losses) from discontinued operations, net of income taxes |
|
— |
|
|
5,155 |
|
|
(7,891 |
) |
Net losses attributable to noncontrolling interests |
|
(6,983 |
) |
|
(8,262 |
) |
|
(7,438 |
) |
Preferred stock dividends |
|
16,039 |
|
|
26,416 |
|
|
14,189 |
|
Net earnings attributable to common shareholders |
$ |
127,793 |
|
$ |
205,746 |
|
$ |
149,641 |
|
Highlights
Three Months Ended February 28, 2025 |
|
Investment Banking and Capital Markets |
|
Asset Management |
|
Non-interest Expenses |
|
Amounts herein pertaining to February 28, 2025 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 months ended February 28, 2025 will be provided upon filing our Quarterly Report on Form 10-Q with the SEC, which we expect to file on or about April 9, 2025.
This press release contains certain “forward-looking statements” within the meaning of the safe harbor provisions of the
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).
Consolidated Statements of Earnings (Unaudited) |
||||||
$ in thousands, except per share amounts |
Three Months Ended |
|||||
|
February 28,
|
February 29,
|
||||
Revenues |
|
|
||||
Investment banking |
$ |
729,510 |
|
$ |
679,065 |
|
Principal transactions |
|
407,230 |
|
|
640,736 |
|
Commissions and other fees |
|
288,300 |
|
|
245,543 |
|
Asset management fees and revenues |
|
85,408 |
|
|
50,372 |
|
Interest |
|
845,171 |
|
|
819,489 |
|
Other |
|
117,245 |
|
|
116,737 |
|
Total revenues |
|
2,472,864 |
|
|
2,551,942 |
|
Interest expense |
|
879,845 |
|
|
813,739 |
|
Net revenues |
|
1,593,019 |
|
|
1,738,203 |
|
Non-interest expenses |
|
|
||||
Compensation and benefits |
|
841,127 |
|
|
926,871 |
|
Brokerage and clearing fees |
|
109,436 |
|
|
109,670 |
|
Underwriting costs |
|
17,846 |
|
|
18,484 |
|
Technology and communications |
|
139,475 |
|
|
137,512 |
|
Occupancy and equipment rental |
|
30,199 |
|
|
28,153 |
|
Business development |
|
72,291 |
|
|
57,651 |
|
Professional services |
|
72,466 |
|
|
77,844 |
|
Depreciation and amortization |
|
30,988 |
|
|
43,202 |
|
Cost of sales |
|
41,568 |
|
|
34,671 |
|
Other expenses |
|
86,558 |
|
|
83,903 |
|
Total non-interest expenses |
|
1,441,954 |
|
|
1,517,961 |
|
Earnings from continuing operations before income taxes |
|
151,065 |
|
|
220,242 |
|
Income tax expense |
|
14,216 |
|
|
55,959 |
|
Net earnings from continuing operations |
|
136,849 |
|
|
164,283 |
|
Net losses from discontinued operations, net of income taxes |
|
— |
|
|
(7,891 |
) |
Net earnings |
|
136,849 |
|
|
156,392 |
|
Net losses attributable to noncontrolling interests |
|
(6,983 |
) |
|
(7,438 |
) |
Preferred stock dividends |
|
16,039 |
|
|
14,189 |
|
Net earnings attributable to common shareholders |
$ |
127,793 |
|
$ |
149,641 |
|
|
|
|
Financial Data and Metrics (Unaudited) |
||||||
|
Three Months Ended |
|||||
|
February 28,
|
November 30,
|
February 29,
|
|||
Other Data: |
|
|
|
|||
Number of trading days |
|
61 |
|
63 |
|
61 |
Number of trading loss days7 |
|
4 |
|
8 |
|
3 |
Average VaR (in millions)8 |
$ |
13.13 |
$ |
12.75 |
$ |
15.13 |
In millions, except other data |
February 28,
|
November 30,
|
February 29,
|
|||
Financial position: |
|
|
|
|||
Total assets |
$ |
70,219 |
$ |
64,360 |
$ |
60,933 |
Cash and cash equivalents |
|
11,176 |
|
12,153 |
|
7,616 |
Financial instruments owned |
|
26,087 |
|
24,138 |
|
23,212 |
Level 3 financial instruments owned9 |
|
781 |
|
734 |
|
589 |
Goodwill and intangible assets |
|
2,038 |
|
2,054 |
|
2,064 |
Total equity |
|
10,268 |
|
10,225 |
|
9,867 |
Total shareholders' equity |
|
10,204 |
|
10,157 |
|
9,780 |
Tangible shareholders' equity10 |
|
8,166 |
|
8,103 |
|
7,716 |
Other data and financial ratios: |
|
|
|
|||
Leverage ratio11 |
|
6.8 |
|
6.3 |
|
6.2 |
Tangible gross leverage ratio12 |
|
8.3 |
|
7.7 |
|
7.6 |
Number of employees at period end |
|
7,701 |
|
7,822 |
|
7,745 |
Number of employees excluding OpNet, Tessellis and Stratos at period end |
|
5,994 |
|
5,968 |
|
5,790 |
Components of Numerators and Denominators for Earnings Per Common Share |
||||||
$ in thousands, except per share amounts |
Three Months Ended |
|||||
|
February 28, 2025 |
February 29, 2024 |
||||
Numerator for earnings per common share from continuing operations: |
|
|
||||
Net earnings from continuing operations |
$ |
136,849 |
|
$ |
164,283 |
|
Less: Net losses attributable to noncontrolling interests |
|
(6,983 |
) |
|
(6,452 |
) |
Allocation of earnings to participating securities |
|
(16,039 |
) |
|
(14,189 |
) |
Net earnings from continuing operations attributable to common shareholders for basic earnings per share |
$ |
127,793 |
|
$ |
156,546 |
|
Net earnings from continuing operations attributable to common shareholders for diluted earnings per share |
$ |
127,793 |
|
$ |
156,546 |
|
|
|
|
||||
Numerator for earnings per common share from discontinued operations: |
|
|
||||
Net losses from discontinued operations, net of taxes |
$ |
— |
|
$ |
(7,891 |
) |
Less: Net losses attributable to noncontrolling interests |
|
— |
|
|
(986 |
) |
Net losses from discontinued operations attributable to common shareholders for basic and diluted earnings per share |
$ |
— |
|
$ |
(6,905 |
) |
Net earnings attributable to common shareholders for basic earnings per share |
$ |
127,793 |
|
$ |
149,641 |
|
Net earnings attributable to common shareholders for diluted earnings per share |
$ |
127,793 |
|
$ |
149,641 |
|
|
|
|
||||
Denominator for earnings per common share: |
|
|
||||
Weighted average common shares outstanding |
|
206,046 |
|
|
211,535 |
|
Weighted average shares of restricted stock outstanding with future service required |
|
(2,200 |
) |
|
(2,402 |
) |
Weighted average restricted stock units outstanding with no future service required |
|
10,690 |
|
|
10,913 |
|
Weighted average basic common shares |
|
214,536 |
|
|
220,046 |
|
Stock options and other share-based awards |
|
5,287 |
|
|
2,894 |
|
Senior executive compensation plan restricted stock unit awards |
|
2,625 |
|
|
2,351 |
|
Weighted average diluted common shares |
|
222,448 |
|
|
225,291 |
|
|
|
|
||||
Earnings (losses) per common share: |
|
|
||||
Basic from continuing operations |
$ |
0.60 |
|
$ |
0.71 |
|
Basic from discontinued operations |
|
— |
|
|
(0.03 |
) |
Basic |
$ |
0.60 |
|
$ |
0.68 |
|
Diluted from continuing operations |
$ |
0.57 |
|
$ |
0.69 |
|
Diluted from discontinued operations |
|
— |
|
|
(0.03 |
) |
Diluted |
$ |
0.57 |
|
$ |
0.66 |
|
Non-GAAP Reconciliations
The following tables reconcile our non-GAAP financial measures to their respective
Return on Adjusted Tangible Equity Reconciliation |
||||||
$ in thousands |
Three Months Ended |
|||||
|
February 28, 2025 |
February 29, 2024 |
||||
Net earnings attributable to common shareholders (GAAP) |
$ |
127,791 |
|
$ |
149,641 |
|
Intangible amortization and impairment expense, net of tax |
|
7,073 |
|
|
4,147 |
|
Adjusted net earnings to common shareholders (non-GAAP) |
|
134,864 |
|
|
153,788 |
|
Preferred stock dividends |
|
16,039 |
|
|
14,189 |
|
Adjusted net earnings to total shareholders (non-GAAP) |
$ |
150,903 |
|
$ |
167,977 |
|
|
|
|
||||
Adjusted net earnings to total shareholders (non-GAAP)1 |
$ |
603,612 |
|
$ |
671,908 |
|
|
|
|
||||
Net earnings impact for net losses from discontinued operations, net of noncontrolling interests |
|
— |
|
|
6,905 |
|
Adjusted net earnings to total shareholders from continuing operations (non-GAAP) |
|
150,903 |
|
|
174,882 |
|
Adjusted net earnings to total shareholders from continuing operations (non-GAAP)1 |
|
603,612 |
|
|
699,528 |
|
|
|
|
||||
|
November 30, |
|||||
|
|
2024 |
|
|
2023 |
|
Shareholders' equity (GAAP) |
$ |
10,156,772 |
|
$ |
9,709,827 |
|
Less: Intangible assets, net and goodwill |
|
(2,054,310 |
) |
|
(2,044,776 |
) |
Less: Deferred tax asset, net |
|
(497,590 |
) |
|
(458,343 |
) |
Less: Weighted average impact of dividends and share repurchases |
|
(94,936 |
) |
|
(67,475 |
) |
Adjusted tangible shareholders' equity (non-GAAP) |
$ |
7,509,936 |
|
$ |
7,139,233 |
|
|
|
|
||||
Return on adjusted tangible shareholders' equity (non-GAAP)1 |
|
8.0 |
% |
|
9.4 |
% |
Return on adjusted tangible shareholders' equity from continuing operations (non-GAAP)1 |
|
8.0 |
% |
|
9.8 |
% |
Adjusted Tangible Book Value and Fully Diluted Shares Outstanding Reconciliation |
||||
Reconciliation of book value (shareholders' equity) to adjusted tangible book value and common shares outstanding to fully diluted shares outstanding: |
||||
$ in thousands, except per share amounts |
|
February 28, 2025 |
||
Book value (GAAP) |
|
$ |
10,204,228 |
|
Stock options(1) |
|
|
114,939 |
|
Intangible assets, net and goodwill |
|
|
(2,037,906 |
) |
Adjusted tangible book value (non-GAAP) |
|
$ |
8,281,261 |
|
|
|
|
|
|
Common shares outstanding (GAAP) |
|
|
206,250 |
|
Preferred shares |
|
|
27,563 |
|
Restricted stock units ("RSUs") |
|
|
13,950 |
|
Stock options(1) |
|
|
5,065 |
|
Other |
|
|
1,459 |
|
Adjusted fully diluted shares outstanding (non-GAAP)(2) |
|
|
254,287 |
|
|
|
|
|
|
Book value per common share outstanding |
|
$ |
49.48 |
|
Adjusted tangible book value per fully diluted share outstanding (non-GAAP) |
|
$ |
32.57 |
|
(1) |
Stock options added to book value are equal to the total number of stock options outstanding as of February 28, 2025 of 5.1 million multiplied by the weighted average exercise price of |
(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 convertible preferred shares if-converted to common shares. |
Notes
-
Return on adjusted tangible shareholders' equity and Return on adjusted tangible shareholders' equity from continuing operations represent non-GAAP financial measures and are based on full year or annualized amounts. Refer to schedule on page 7 for a reconciliation to
U.S. GAAP amounts. -
Shares outstanding on a fully diluted basis (a non-GAAP financial measure) is defined as common shares outstanding plus preferred shares, restricted stock units, stock options and other shares. Refer to schedule on page 8 for a reconciliation to
U.S. GAAP amounts. -
Adjusted 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 8 for a reconciliation to
U.S. GAAP amounts. - 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 present direct Asset Management revenues. We believe that aggregating Allocated net interest would obscure the revenue results by including an amount that is unique to our credit spreads, debt maturity profile, capital structure, liquidity risks and allocation methods.
- 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.
- Asset management fees and revenues include 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.
- Number of trading loss days is calculated based on trading activities in our Investment Banking and Capital Markets and Asset Management business segments, excluding certain Other investments.
-
VaR estimates the potential loss in value of trading positions 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, 2024. - 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.
- Tangible shareholders' equity (a non-GAAP financial measure) is defined as shareholders' equity less Intangible assets and goodwill. We believe that tangible shareholders' equity is meaningful for valuation purposes, as financial companies are often measured as a multiple of tangible shareholders' equity, making these ratios meaningful for investors.
- Leverage ratio equals total assets divided by total equity.
- Tangible gross leverage ratio (a non-GAAP financial measure) equals total assets less goodwill and intangible assets divided by tangible shareholders' equity. The tangible gross leverage ratio is used by rating agencies in assessing our leverage ratio.
- Beginning in fiscal 2024, we now refer to "Merchant banking" as “Other investments” in our Asset Management reportable segment.
- Beginning in the fourth quarter of 2024, revenues from corporate equity derivative transactions historically included within Other investment banking net revenues were reclassified to Equities net revenues as the underlying business has matured and has started to generate meaningful revenues. Prior year amounts have been revised to conform to this reclassification change to the current year reporting.
- Compensation ratio equals total compensation expense divided by total net revenues. Non-compensation ratio equals total non-compensation expense divided by total net revenues.
Source: Jefferies Financial Group Inc.
View source version on businesswire.com: https://www.businesswire.com/news/home/20250326627495/en/
FOR MORE INFORMATION
Jonathan Freedman 212.778.8913
Source: Jefferies Financial Group Inc.