NEW YORK -- (BUSINESS WIRE) --
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.
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JEFFERIES GROUP LLC AND SUBSIDIARIES |
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CONSOLIDATED STATEMENTS OF EARNINGS |
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(Amounts in Thousands) |
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(Unaudited) |
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Quarter Ended |
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November 30, 2017 |
August 31, 2017 |
November 30, 2016 |
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Revenues: |
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Commissions and other fees |
$ |
155,710 |
$ |
139,082 |
$ |
157,549 |
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Principal transactions |
107,418 |
185,215 |
137,362 |
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Investment banking |
528,699 |
475,702 |
415,067 |
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Asset management fees and investment income from managed funds |
4,769 |
5,465 |
1,319 |
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Interest |
245,278 |
230,496 |
202,002 |
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Other |
39,625 |
12,371 |
26,661 |
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Total revenues |
1,081,499 |
1,048,331 |
939,960 |
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Interest expense |
258,889 |
247,639 |
198,191 |
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Net revenues |
822,610 |
800,692 |
741,769 |
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Non-interest expenses: |
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Compensation and benefits |
455,469 |
462,933 |
427,451 |
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Non-compensation expenses: |
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Floor brokerage and clearing fees |
41,257 |
44,869 |
42,946 |
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Technology and communications |
73,817 |
72,440 |
66,396 |
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Occupancy and equipment rental |
25,759 |
27,736 |
26,635 |
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Business development |
27,661 |
23,125 |
25,405 |
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Professional services |
31,167 |
25,007 |
29,763 |
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Other |
25,200 |
22,318 |
26,644 |
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Total non-compensation expenses |
224,861 |
215,495 |
217,789 |
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Total non-interest expenses |
680,330 |
678,428 |
645,240 |
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Earnings before income taxes |
142,280 |
122,264 |
96,529 |
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Income tax expense |
52,331 |
38,439 |
9,454 |
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Net earnings |
89,949 |
83,825 |
87,075 |
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Net earnings (loss) attributable to noncontrolling interests |
36 |
10 |
(105) |
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Net earnings attributable to Jefferies Group LLC |
$ |
89,913 |
$ |
83,815 |
$ |
87,180 |
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Pretax operating margin |
17.3% |
15.3% |
13.0% |
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Effective tax rate (1) |
36.8% |
31.4% |
9.8% |
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(1) |
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The effective tax rate for the three months ended November 30, 2016 was impacted by revisions to previously forecasted results. |
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JEFFERIES GROUP LLC AND SUBSIDIARIES |
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CONSOLIDATED STATEMENTS OF EARNINGS |
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(Amounts in Thousands) |
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(Unaudited) |
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Twelve Months Ended |
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November 30, 2017 |
November 30, 2016 |
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Revenues: |
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Commissions and other fees |
$ |
593,257 |
$ |
611,574 |
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Principal transactions |
800,660 |
519,652 |
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Investment banking |
1,764,285 |
1,193,973 |
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Asset management fees and investment income from managed funds |
16,463 |
31,062 |
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Interest |
905,601 |
857,838 |
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Other |
98,316 |
19,724 |
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Total revenues |
4,178,582 |
3,233,823 |
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Interest expense |
980,473 |
819,209 |
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Net revenues |
3,198,109 |
2,414,614 |
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Non-interest expenses: |
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Compensation and benefits |
1,829,096 |
1,568,948 |
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Non-compensation expenses: |
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Floor brokerage and clearing fees |
179,478 |
167,205 |
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Technology and communications |
279,242 |
262,396 |
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Occupancy and equipment rental |
102,904 |
101,133 |
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Business development |
99,884 |
93,105 |
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Professional services |
114,711 |
112,562 |
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Other |
87,870 |
79,293 |
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Total non-compensation expenses |
864,089 |
815,694 |
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Total non-interest expenses |
2,693,185 |
2,384,642 |
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Earnings before income taxes |
504,924 |
29,972 |
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Income tax expense |
147,340 |
14,566 |
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Net earnings |
357,584 |
15,406 |
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Net earnings (loss) attributable to noncontrolling interests |
86 |
(28) |
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Net earnings attributable to Jefferies Group LLC |
$ |
357,498 |
$ |
15,434 |
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Pretax operating margin |
15.8% |
1.2% |
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Effective tax rate |
29.2% |
48.6% |
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JEFFERIES GROUP LLC AND SUBSIDIARIES |
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SELECTED STATISTICAL INFORMATION |
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(Amounts in Thousands, Except Other Data) |
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(Unaudited) |
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Quarter Ended |
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November 30, 2017 |
August 31, 2017 |
November 30, 2016 |
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Revenues by Source |
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Equities |
$ |
194,426 |
$ |
176,789 |
$ |
175,960 |
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Fixed income |
94,716 |
142,736 |
149,423 |
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Total Equities and Fixed income |
289,142 |
319,525 |
325,383 |
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Equity |
122,424 |
86,081 |
62,085 |
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Debt |
174,484 |
186,261 |
128,706 |
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Capital markets |
296,908 |
272,342 |
190,791 |
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Advisory |
231,791 |
203,360 |
224,276 |
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Total Investment banking |
528,699 |
475,702 |
415,067 |
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Asset management fees and investment income from managed funds: |
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Asset management fees |
4,122 |
4,272 |
633 |
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Investment income from managed funds |
647 |
1,193 |
686 |
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Total |
4,769 |
5,465 |
1,319 |
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Net revenues |
$ |
822,610 |
$ |
800,692 |
$ |
741,769 |
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Other Data |
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Number of trading days |
63 |
65 |
63 |
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Number of trading loss days |
5 |
3 |
11 |
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Average firmwide VaR (in millions) (1) |
$ |
5.29 |
$ |
6.51 |
$ |
8.46 |
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(1) |
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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. |
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JEFFERIES GROUP LLC AND SUBSIDIARIES |
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SELECTED STATISTICAL INFORMATION |
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(Amounts in Thousands, Except Other Data) |
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(Unaudited) |
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Twelve Months Ended |
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November 30, 2017 |
November 30, 2016 |
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Revenues by Source |
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Equities |
$ |
799,451 |
$ |
549,553 |
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Fixed income |
617,910 |
640,026 |
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Total Equities and Fixed income |
1,417,361 |
1,189,579 |
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Equity |
344,973 |
235,207 |
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Debt |
649,220 |
304,576 |
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Capital markets |
994,193 |
539,783 |
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Advisory |
770,092 |
654,190 |
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Total Investment banking |
1,764,285 |
1,193,973 |
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Asset management fees and investment income (loss) from managed funds: |
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Asset management fees |
20,490 |
26,412 |
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Investment income (loss) from managed funds |
(4,027) |
4,650 |
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Total |
16,463 |
31,062 |
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Net revenues |
$ |
3,198,109 |
$ |
2,414,614 |
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Other Data |
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Number of trading days |
252 |
253 |
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Number of trading loss days |
14 |
38 |
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Average firmwide VaR (in millions) (1) |
$ |
7.79 |
$ |
7.91 |
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(1) |
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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. |
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JEFFERIES GROUP LLC AND SUBSIDIARIES |
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FINANCIAL HIGHLIGHTS |
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(Amounts in Millions, Except Where Noted) |
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(Unaudited) |
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Quarter Ended |
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November 30, 2017 |
August 31, 2017 |
November 30, 2016 |
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Financial position: |
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Total assets (1) |
$ |
39,706 |
$ |
39,358 |
$ |
36,941 |
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Average total assets for the period (1) |
$ |
47,058 |
$ |
45,311 |
$ |
43,412 |
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Average total assets less goodwill and intangible assets for the period (1) |
$ |
45,215 |
$ |
43,467 |
$ |
41,560 |
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Cash and cash equivalents (1) |
$ |
5,164 |
$ |
4,807 |
$ |
3,529 |
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Cash and cash equivalents and other sources of liquidity (1) (2) |
$ |
6,709 |
$ |
6,191 |
$ |
5,303 |
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Cash and cash equivalents and other sources of liquidity - % total assets (1) (2) |
16.9% |
15.7% |
14.4% |
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Cash and cash equivalents and other sources of liquidity - % total assets less goodwill and intangible assets (1) (2) |
17.7% |
16.5% |
15.1% |
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Financial instruments owned (1) |
$ |
13,998 |
$ |
14,037 |
$ |
13,810 |
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Goodwill and intangible assets (1) |
$ |
1,843 |
$ |
1,841 |
$ |
1,847 |
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Total equity (including noncontrolling interests) (1) |
$ |
5,760 |
$ |
5,655 |
$ |
5,371 |
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Total Jefferies Group LLC member's equity (1) |
$ |
5,759 |
$ |
5,654 |
$ |
5,370 |
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Tangible Jefferies Group LLC member's equity (1) (3) |
$ |
3,916 |
$ |
3,813 |
$ |
3,523 |
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Level 3 financial instruments: |
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Level 3 financial instruments owned (1) (4) |
$ |
328 |
$ |
348 |
$ |
413 |
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Level 3 financial instruments owned - % total assets |
0.8% |
0.9% |
1.1% |
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Level 3 financial instruments owned - % total financial instruments (1) |
2.3% |
2.5% |
3.0% |
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Level 3 financial instruments owned - % tangible Jefferies Group LLC member's equity |
8.4% |
9.1% |
11.7% |
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Other data and financial ratios: |
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Total long-term capital (1) (5) |
$ |
11,162 |
$ |
11,038 |
$ |
10,501 |
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Leverage ratio (1) (6) |
6.9 |
7.0 |
6.9 |
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Tangible gross leverage ratio (1) (7) |
9.7 |
9.8 |
10.0 |
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Number of trading days |
63 |
65 |
63 |
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Number of trading loss days |
5 |
3 |
11 |
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Average firmwide VaR (8) |
$ |
5.29 |
$ |
6.51 |
$ |
8.46 |
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Number of employees, at period end |
3,450 |
3,438 |
3,329 |
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JEFFERIES GROUP LLC AND SUBSIDIARIES |
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FINANCIAL HIGHLIGHTS - FOOTNOTES |
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(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. |
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(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. |
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(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. |
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(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. |
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(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. |
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(6) |
Leverage ratio equals total assets divided by total equity. |
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(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. |
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(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. |
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