Jefferies Announces First Quarter 2024 Financial Results
NEW YORK--(BUSINESS WIRE)--March 27, 2024--
Jefferies Financial Group Inc. (NYSE: JEF)
Q1 Financial Highlights
-- Net earnings attributable to common shareholders of $150 million, or
$0.66 per diluted common share, and net earnings attributable to common
shareholders from continuing operations of $157 million, or $0.69 per
diluted common share. Adjusting our results this quarter for a pre-tax
loss of $55 million associated with our investment in Weiss
Multi-Strategy Advisers, which recently announced it is closing down, our
net earnings attributable to common shareholders from continuing
operations was $196 million16, or $0.8716 per diluted common share. Of
the pre-tax loss to us of $55 million, $30 million reduced our Asset
Management net revenues and $25 million increased our non-compensation
expenses.
-- Annualized return on adjusted tangible total equity from continuing
operations1 of 9.8%. Adjusting for the impact of the loss on Weiss, our
annualized return on adjusted tangible total equity from continuing
operations was 12.0%1
-- Net revenues of $1.74 billion
-- Investment Banking net revenues of $740 million
-- Capital Markets net revenues of $712 million, our third best
Capital Markets quarter ever
-- Asset Management net revenues (before allocated net interest4)
of $288 million, which was $30 million lower due to the Weiss
loss
-- At February 29, 2024, we had 212.0 million common shares outstanding
and 253.5 million shares outstanding on a fully diluted basis2. Our book
value per common share was $46.13 and tangible book value per fully
diluted share3 was $30.89 at February 29, 2024
“Our Q1 results reflect solid performance across our businesses and our Investment Banking pipeline continues to strengthen, which leads us to believe a more robust market is developing. Our strong results in Capital Markets has continued into the current quarter. We are pleased that, adjusting for the impact of the net loss on Weiss, we generated an annualized return on adjusted tangible equity from continuing operations of 12.0% and net earnings from continuing operations of $0.87 per diluted common share. This bodes well for the balance of 2024, especially as we expect our recent significant hires to increasingly contribute to our results.
“Investment Banking net revenues for the quarter were $740 million, up 28.2% from the prior quarter and 31.4% from the same quarter last year, primarily due to improved mergers and acquisitions and equity underwriting activity reflecting our market share gains against modest improvement in the market. Capital Markets continued its strong performance, with net revenues of $712 million, up 47.9% from the prior quarter and 8.8% versus the same quarter last year. We expect our Investment Banking momentum to continue, and the market share gains we have achieved compared to the prior quarter and prior year quarter across Advisory, Equity underwriting and Leveraged finance to continue, as the investments we have made in our business further mature. Furthermore, we are extremely pleased with our alliance with SMBC, which continues to gain traction and is additive to our business model and prospects. We believe we will further expand our cooperation to additional regions and further areas of mutual opportunity.
“Asset Management also performed well, as we are seeing improved performance from our diversified platform of offerings. We are disappointed in the outcome at Weiss Multi-Strategy, but we are pleased that the shutdown was orderly and investors protected. Our loss is a result of support we provided the platform that was incremental to our separately managed account.”
Richard Handler, CEO, and Brian Friedman, President
Quarterly Cash Dividend
The Jefferies Board of Directors declared a quarterly cash dividend equal to $0.30 per Jefferies common share, payable on May 30, 2024 to record holders of Jefferies common shares on May 20, 2024.
Financial Summary
(Dollars in thousands,
except per share
amounts) Three Months Ended
----------------------- ----------------------------------- ----------
February 28,
February 29, 2024 2023(14) % Change
----------------------- ----------------- ---------------- ----------
Net revenues:
Investment Banking and
Capital Markets $ 1,451,288 $ 1,217,132 19%
Asset Management 273,383 68,455 299%
Other 13,532 (2,095) N/M
----------------------- ------------ ----------- ----- ---
Net revenues 1,738,203 1,283,492 35%
----------------------- ------------ ----------- -----
Net earnings from
continuing operations
before income taxes 220,242 158,018 39%
Income tax expense 55,959 28,694 95%
----------------------- ------------ ----------- -----
Net earnings from
continuing operations 164,283 129,324 27%
Net losses from
discontinued
operations, net of
income tax benefit (7,891) -- N/M
----------------------- ------------ ----------- ----- ---
Net earnings 156,392 129,324 21%
----------------------- ------------ ----------- -----
Net losses attributable
to noncontrolling
interests (7,438) (6,055) 23%
Net losses attributable
to redeemable
noncontrolling
interests -- (256) (100 ) %
Preferred stock
dividends 14,189 2,016 604%
----------------------- ------------ ----------- -----
Net earnings
attributable to common
shareholders $ 149,641 $ 133,619 12%
======================= ============ =========== =====
Earnings (losses) per
common share:
Basic from continuing
operations $ 0.71 $ 0.56 27%
Basic from discontinued
operations (0.03) -- N/M
----------------------- ------------ ----------- ----- ---
Basic $ 0.68 $ 0.56 22%
----------------------- ------------ ----------- -----
Diluted from continuing
operations $ 0.69 $ 0.54 28%
Diluted from
discontinued
operations (0.03) -- N/M
----------------------- ------------ ----------- ----- ---
Diluted $ 0.66 $ 0.54 23%
----------------------- ------------ ----------- -----
Weighted average common
shares 219,902 239,101
Weighted average
diluted common shares 225,168 248,095
N/M — Not Meaningful
Highlights
Three Months Ended February 29, 2024 ------------------------------------------------------------------------------ Net earnings attributable to common shareholders of:$150 million, or $0.66 per diluted common share $164 million, or $0.69 per diluted common share, from continuing operations $196 million, or $0.87 per diluted common share, from continuing operations excluding Weiss net loss(16) Repurchased 1.1 million common shares for $43 million, an average price of $40.63 per share, in connection with net-share settlements related to distributions under our equity compensation plans. We had 212.0 million common shares outstanding and 253.5 million common shares outstanding on a fully diluted basis(2) at February 29, 2024. Our book value per common share was $46.13 and tangible book value per fully diluted share(3) was $30.89 at February 29, 2024. Effective tax rate of 25.4% ------------------------------------------------------------------------------ Investment Banking and Capital Markets Investment Banking net revenues of $740 million were higher than the prior year comparable period driven by improved performance across advisory, and equity and debt underwriting. Advisory net revenues were higher than the same quarter last year, attributable to increased mergers and acquisitions volume and continued market share gains. Underwriting net revenues of $338 million increased from the same quarter last year, as equity underwriting experienced periods of increased activity, as equity markets remained robust, as well as our expanded capabilities and enhanced market position. Debt underwriting activity improved as interest rates and inflationary concerns have stabilized. Capital Markets net revenues of $712 million were higher compared to the prior year quarter primarily due to stronger performance in Equities attributable to increased volumes and more favorable trading opportunities, while Fixed Income net revenues remained consistent from the comparable prior year. ------------------------------------------------------------------------------