Jefferies Group LLC today announced financial results for its
fiscal fourth quarter and full year 2017.
Highlights for the twelve months ended November 30, 2017:
- Record Total Net Revenues of $3.20
billion
- Record Investment Banking Net Revenues
of $1.76 billion
- Total Equities and Fixed Income Net
Revenues of $1.42 billion
- Earnings Before Income Taxes of $505
million
- Record Net Earnings of $358
million
Highlights for the three months ended November 30, 2017:
- Total Net Revenues of $823 million
- Record Investment Banking Net Revenues
of $529 million
- Total Equities and Fixed Income Net
Revenues of $289 million
- Earnings Before Income Taxes of $142
million
- Net Earnings of $90 million
Rich Handler, Chairman and Chief Executive Officer, and Brian
Friedman, Chairman of the Executive Committee, commented: “We are
pleased that Jefferies' 2017 net revenues and net income represent
the best results in our 55-year history. Our strategy of
prioritizing expansion of our investment banking effort continues
to succeed and should yield further growth over the next several
years. The competitive landscape continues to provide
opportunities for Jefferies to grow further by leveraging the
unique blend of our non-bank Wall Street culture and business
model, deep and broad sectoral expertise, and global geographic
reach in investment banking, equity and fixed income trading, and
research. We enter 2018 with strong momentum throughout our
Company.”
“Our fourth quarter performance was driven by $529 million in
Investment Banking net revenues. These quarterly record Investment
Banking results reflect solid contributions from equity and debt
capital markets, strong performance in our merger and acquisition
advisory business, and broad participation across our industry
groups and regional efforts. Our Equities net revenues of $194
million were solid, while our Fixed Income net revenues of $95
million are reflective of a period of lighter volumes, particularly
in November, and narrower bid - offer spreads.”
“We would like to express our sincere thanks to our 3,450
employee-partners around the globe for their commitment, hard work,
loyalty, integrity and dedication in serving our clients and
Leucadia's shareholders.”
The attached financial tables should be read in conjunction with
our Quarterly Report on Form 10-Q for the quarter ended
August 31, 2017, our Annual Report on Form 10-K for the year
ended November 30, 2016 and our amended Annual Report on Form
10-K/A for the year ended November 30, 2016. Amounts herein
pertaining to November 30, 2017 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, 2017.
This 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 results and performance, including our future market
share and expected financial results. It is possible that the
actual results may differ materially from the anticipated results
indicated in these forward-looking statements. Please refer to our
most recent Annual Report on Form 10-K for a discussion of
important factors that could cause actual results to differ
materially from those projected in these forward-looking
statements.
Jefferies, the world's only independent full-service global
investment banking firm focused on serving clients for over 50
years, is a leader in providing insight, expertise and execution to
investors, companies and governments. Our firm provides a full
range of investment banking, sales, trading, research and strategy
across the spectrum of equities, fixed income and foreign exchange,
as well as wealth management, in the Americas, Europe and Asia.
Jefferies Group LLC is a wholly-owned subsidiary of Leucadia
National Corporation (NYSE: LUK), a diversified holding
company.
JEFFERIES GROUP LLC AND SUBSIDIARIES CONSOLIDATED
STATEMENTS OF EARNINGS (Amounts in Thousands)
(Unaudited) Quarter Ended
November 30, 2017 August 31, 2017 November 30,
2016 Revenues: Commissions and other fees $ 155,710 $
139,082 $ 157,549 Principal transactions 107,418 185,215 137,362
Investment banking 528,699 475,702 415,067
Asset management fees and investment
income from managed funds
4,769 5,465 1,319 Interest 245,278 230,496 202,002 Other 39,625
12,371 26,661 Total revenues 1,081,499 1,048,331 939,960 Interest
expense 258,889 247,639 198,191 Net revenues 822,610 800,692
741,769 Non-interest expenses: Compensation and benefits
455,469 462,933 427,451 Non-compensation expenses: Floor
brokerage and clearing fees 41,257 44,869 42,946 Technology and
communications 73,817 72,440 66,396 Occupancy and equipment rental
25,759 27,736 26,635 Business development 27,661 23,125 25,405
Professional services 31,167 25,007 29,763 Other 25,200 22,318
26,644 Total non-compensation expenses 224,861 215,495 217,789
Total non-interest expenses 680,330 678,428 645,240 Earnings before
income taxes 142,280 122,264 96,529 Income tax expense 52,331
38,439 9,454 Net earnings 89,949 83,825 87,075 Net earnings (loss)
attributable to noncontrolling interests 36 10 (105) Net earnings
attributable to Jefferies Group LLC $ 89,913 $ 83,815 $ 87,180
Pretax operating margin 17.3% 15.3% 13.0% Effective tax rate
(1) 36.8% 31.4% 9.8% (1) The effective tax rate for the
three months ended November 30, 2016 was impacted by revisions to
previously forecasted results.
JEFFERIES GROUP LLC
AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS
(Amounts in Thousands) (Unaudited)
Twelve Months Ended November 30, 2017 November 30,
2016 Revenues: Commissions and other fees $ 593,257 $
611,574 Principal transactions 800,660 519,652 Investment banking
1,764,285 1,193,973
Asset management fees and investment
income from managed funds
16,463 31,062 Interest 905,601 857,838 Other 98,316 19,724 Total
revenues 4,178,582 3,233,823 Interest expense 980,473 819,209 Net
revenues 3,198,109 2,414,614 Non-interest expenses:
Compensation and benefits 1,829,096 1,568,948
Non-compensation expenses: Floor brokerage and clearing fees
179,478 167,205 Technology and communications 279,242 262,396
Occupancy and equipment rental 102,904 101,133 Business development
99,884 93,105 Professional services 114,711 112,562 Other 87,870
79,293 Total non-compensation expenses 864,089 815,694 Total
non-interest expenses 2,693,185 2,384,642 Earnings before income
taxes 504,924 29,972 Income tax expense 147,340 14,566 Net earnings
357,584 15,406 Net earnings (loss) attributable to noncontrolling
interests 86 (28) Net earnings attributable to Jefferies Group LLC
$ 357,498 $ 15,434 Pretax operating margin 15.8% 1.2%
Effective tax rate 29.2% 48.6%
JEFFERIES GROUP LLC
AND SUBSIDIARIES SELECTED STATISTICAL INFORMATION
(Amounts in Thousands, Except Other Data) (Unaudited)
Quarter Ended November 30, 2017
August 31, 2017 November 30, 2016
Revenues by
Source
Equities $ 194,426 $ 176,789 $ 175,960 Fixed income 94,716 142,736
149,423 Total Equities and Fixed income 289,142 319,525 325,383
Equity 122,424 86,081 62,085 Debt 174,484 186,261 128,706
Capital markets 296,908 272,342 190,791 Advisory 231,791 203,360
224,276 Total Investment banking 528,699 475,702 415,067
Asset management fees and investment
income from managed funds:
Asset management fees 4,122 4,272 633 Investment income from
managed funds 647 1,193 686 Total 4,769 5,465 1,319
Net
revenues $ 822,610 $ 800,692
$ 741,769
Other
Data
Number of trading days 63 65 63 Number of trading loss days 5 3 11
Average firmwide VaR (in millions) (1) $ 5.29 $ 6.51 $ 8.46
(1) VaR estimates the potential loss in value of our 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 7
"Management's Discussion and Analysis" in our Annual Report on Form
10-K for the year ended November 30, 2016.
JEFFERIES GROUP LLC AND SUBSIDIARIES SELECTED STATISTICAL
INFORMATION (Amounts in Thousands, Except Other Data)
(Unaudited) Twelve Months Ended
November 30, 2017 November 30, 2016
Revenues by
Source
Equities $ 799,451 $ 549,553 Fixed income 617,910 640,026 Total
Equities and Fixed income 1,417,361 1,189,579 Equity 344,973
235,207 Debt 649,220 304,576 Capital markets 994,193 539,783
Advisory 770,092 654,190 Total Investment banking 1,764,285
1,193,973 Asset management fees and investment income (loss)
from managed funds: Asset management fees 20,490 26,412 Investment
income (loss) from managed funds (4,027) 4,650 Total 16,463 31,062
Net revenues $ 3,198,109 $
2,414,614
Other
Data
Number of trading days 252 253 Number of trading loss days 14 38
Average firmwide VaR (in millions) (1) $ 7.79 $ 7.91 (1)
VaR estimates the potential loss in value of our 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 7
"Management's Discussion and Analysis" in our Annual Report on Form
10-K for the year ended November 30, 2016.
JEFFERIES GROUP LLC AND SUBSIDIARIES FINANCIAL
HIGHLIGHTS (Amounts in Millions, Except Where Noted)
(Unaudited) Quarter
Ended November 30, 2017 August 31, 2017
November 30, 2016
Financial
position:
Total assets (1) $ 39,706 $ 39,358 $ 36,941 Average total assets
for the period (1) $ 47,058 $ 45,311 $ 43,412 Average total assets
less goodwill and intangible assets for the period (1) $ 45,215 $
43,467 $ 41,560 Cash and cash equivalents (1) $ 5,164 $
4,807 $ 3,529 Cash and cash equivalents and other sources of
liquidity (1) (2) $ 6,709 $ 6,191 $ 5,303 Cash and cash equivalents
and other sources of liquidity - % total assets (1) (2) 16.9% 15.7%
14.4%
Cash and cash equivalents and other
sources of liquidity - % total assets less goodwill and intangible
assets (1) (2)
17.7% 16.5% 15.1% Financial instruments owned (1) $ 13,998 $
14,037 $ 13,810 Goodwill and intangible assets (1) $ 1,843 $ 1,841
$ 1,847 Total equity (including noncontrolling interests)
(1) $ 5,760 $ 5,655 $ 5,371 Total Jefferies Group LLC member's
equity (1) $ 5,759 $ 5,654 $ 5,370 Tangible Jefferies Group LLC
member's equity (1) (3) $ 3,916 $ 3,813 $ 3,523
Level 3 financial
instruments:
Level 3 financial instruments owned (1) (4) $ 328 $ 348 $ 413 Level
3 financial instruments owned - % total assets 0.8% 0.9% 1.1% Level
3 financial instruments owned - % total financial instruments (1)
2.3% 2.5% 3.0%
Level 3 financial instruments owned - %
tangible Jefferies Group LLC member's equity
8.4% 9.1% 11.7%
Other data and
financial ratios:
Total long-term capital (1) (5) $ 11,162 $ 11,038 $ 10,501 Leverage
ratio (1) (6) 6.9 7.0 6.9 Tangible gross leverage ratio (1) (7) 9.7
9.8 10.0 Number of trading days 63 65 63 Number of trading
loss days 5 3 11 Average firmwide VaR (8) $ 5.29 $ 6.51 $ 8.46
Number of employees, at period end 3,450 3,438 3,329
JEFFERIES GROUP LLC AND SUBSIDIARIES FINANCIAL
HIGHLIGHTS - FOOTNOTES (1) Amounts pertaining to
November 30, 2017 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, 2017. (2) At
November 30, 2017, other sources of liquidity include high quality
sovereign government securities and reverse repurchase agreements
collateralized by U.S. government securities and other high quality
sovereign government securities of $1,031 million, in aggregate,
and $514 million, being the estimated amount of additional secured
financing that could be reasonably expected to be obtained from our
financial instruments that are currently not pledged after
considering reasonable financing haircuts. The corresponding
amounts included in other sources of liquidity at August 31, 2017
were $1,083 million and $301 million, respectively, and at November
30, 2016, were $1,455 million and $319 million, respectively.
(3) Tangible Jefferies Group LLC member's equity (a non-GAAP
financial measure) represents total Jefferies Group LLC member's
equity less goodwill and identifiable intangible assets. We believe
that tangible Jefferies Group LLC member's 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) 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. (5) At November 30, 2017,
August 31, 2017 and November 30, 2016, total long-term capital
includes our long-term debt of $5,403 million, $5,383 million and
$5,131 million, respectively, and total equity. Long-term debt
included in total long-term capital is reduced by the amount of
debt maturing in less than one year, as applicable. (6)
Leverage ratio equals total assets divided by total equity.
(7) Tangible gross leverage ratio (a non-GAAP financial measure)
equals total assets less goodwill and identifiable intangible
assets divided by tangible Jefferies Group LLC member's equity. The
tangible gross leverage ratio is used by rating agencies in
assessing our leverage ratio. (8) VaR estimates the
potential loss in value of our 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 7 "Management's Discussion and
Analysis" in our Annual Report on Form 10-K for the year ended
November 30, 2016.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20171219005389/en/
Jefferies Group LLCPeregrine C. Broadbent, 212-284-2338Chief
Financial Officer
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