JEF Jefferies Financial Group Inc

Quarterly Dividend Increased 14.3% to $0.40 Per Common Share

Jefferies Financial Group Inc. (NYSE: JEF):

Q4 Financial Highlights

$ in thousands, except per share amounts

Quarter End

 

Year-to-Date

 

 

4Q24

 

 

4Q23

 

 

 

2024

 

 

2023

 

Net earnings attributable to common shareholders

$

205,746

 

$

65,639

 

 

$

669,273

 

$

263,072

 

Diluted earnings per common share from continuing operations

$

0.91

 

$

0.29

 

 

$

2.96

 

$

1.10

 

Return on adjusted tangible shareholders' equity from continuing operations1

 

12.7

%

 

4.1

%

 

 

10.8

%

 

3.9

%

Total net revenues

$

1,956,602

 

$

1,197,206

 

 

$

7,034,803

 

$

4,700,417

 

Investment banking net revenues14

$

986,824

 

$

571,828

 

 

$

3,444,787

 

$

2,272,218

 

Capital markets net revenues14

$

651,690

 

$

486,169

 

 

$

2,759,554

 

$

2,232,161

 

Asset management net revenues

$

314,750

 

$

140,646

 

 

$

803,669

 

$

188,345

 

Pre-tax earnings from continuing operations

$

304,862

 

$

87,261

 

 

$

1,005,546

 

$

354,269

 

Book value per common share

$

49.42

 

$

46.10

 

 

$

49.42

 

$

46.10

 

Adjusted tangible book value per fully diluted share3

$

32.36

 

$

30.82

 

 

$

32.36

 

$

30.82

 

Quarterly Cash Dividend

The Jefferies Board of Directors declared a quarterly cash dividend equal to $0.40 per Jefferies common share, a 14.3% increase from the prior dividend rate, payable on February 27, 2025 to record holders of Jefferies common shares on February 14, 2025.

Management Comments

"Our fourth quarter net revenues of $1.96 billion, pre-tax earnings from continuing operations of $305 million and diluted earnings per share from continuing operations of $0.91 are 63%, 249% and 214%, higher than the prior year quarter, respectively. Our quarterly results reflect strong performance in Investment Banking (up 73%), including a record quarter in Advisory (up 91%), as well as another robust quarter for Equities (up 49%) and solid performance in Fixed income (up 15%). Asset Management fee and investment return net revenues of $116 million were substantially higher than the prior year quarter, reflecting fee growth and strong overall performance from a number of strategies.

“Our 2024 net revenues of $7.03 billion, pre-tax earnings from continuing operations of $1.01 billion and diluted earnings per share from continuing operations of $2.96 are 50%, 184% and 169% higher than the prior year, respectively. Our annual results reflect continued strength and sustained momentum across all lines of business, primarily attributable to market share gains and a stronger overall market for our services.

"We are laser focused on our core mission of building and being the best full-service global investment banking and capital markets firm and we are very excited about our progress. More normalized market conditions and the maturation of our platform are beginning to show our earnings potential, as our core businesses have generated meaningfully improved underlying operating margins. Our non-compensation expense ratio improved from 39% in 2023 to 34% in 2024, as our revenue growth outpaced expense growth. We are optimistic about our ability to continue to further expand operating margins as we continue to grow our core businesses. The consolidation of Stratos and Tessellis caused meaningfully higher gross revenues and expenses to be recorded in Other Investments in our Asset Management segment for the fourth quarter and the full year, however, Other investments had a nominal impact on earnings.

"Our 2024 Investment Banking net revenues of $3.44 billion were up 52% from the prior year, reflecting our second highest annual results on record, as well as record market share across many of our key products, sectors and regions. Following a period of significant investment in our business, today we provide our clients with an exceptional offering of full-service capabilities that extend to the largest and most complex transactions and underwritings, best-in-class talent, true local reach and access across every major market. Critically, these capabilities are underpinned by a culture of service, urgency and creative problem solving.

"Capital Markets net revenues of $2.76 billion for 2024 were up 24% versus the prior year, driven by solid overall market conditions and strength across most of our business lines. Equities net revenues increased 40% from the prior year, with strong performance in our cash and electronic businesses. We continue to invest across our electronic trading, equity finance and equity derivative platforms to deliver effective liquidity and execution globally to our clients. Fixed Income net revenues increased 7% from the prior year, driven by robust client demand and particular strength in our distressed trading and securitization businesses, partially offset by less favorable results in our global structured solutions business. The growth of our Fixed Income franchise is the result of the consistency of our strategy, which focuses on long-term client partnerships and a commitment to fundamental credit analysis, leading to an idea-driven, solutions-oriented approach.

"Our 2024 Asset Management fee and investment return revenues of $316 million were up 27% from the prior year, reflecting fee growth and strong overall performance from a number of our strategies. We are pleased with this performance, considering the unique challenges the business faced during the year from Weiss Multi-Strategy Advisors and 352 Capital. Other investments had 2024 net revenues of $550 million largely due to the consolidation of Stratos and Tessellis causing the inclusion of significant gross revenues and expenses.

"Jefferies begins 2025 in the best position ever in our firm’s sixty-two year history. We believe our team is incredibly talented and special, and they are driving our momentum forward. Our clients are rewarding us with broad global growth and an enhanced market position in almost everything Jefferies offers. After decades of hard work, we are in the front row of the pack of competitors serving clients across all sectors and regions in investment banking and capital markets. We believe we have developed to where we are today because of our unique culture of collaboration and integrity. By emphasizing a sense of long-term ownership, entrepreneurship and purpose, we have been able to achieve our ever-better market position, and we will do everything in our power to preserve and enhance it as we continue our journey."

Richard Handler, CEO, and Brian Friedman, President

Please refer to the just-released Jefferies Financial Group Annual Letter from our CEO and President for broader perspective on 2024, as well as our strategy and outlook.

Financial Summary (Unaudited)

 

$ in thousands

Three Months Ended

Year Ended

 

November 30, 2024

August 31, 2024

November 30, 2023

November 30, 2024

November 30, 2023

Net revenues by source:

 

 

 

 

 

Advisory

$

596,707

 

$

592,462

 

$

312,310

 

$

1,811,634

 

$

1,198,916

 

Equity underwriting

 

191,218

 

 

150,096

 

 

132,158

 

 

799,804

 

 

560,243

 

Debt underwriting

 

171,456

 

 

183,078

 

 

129,436

 

 

689,227

 

 

410,208

 

Other investment banking14

 

27,443

 

 

17,930

 

 

(2,076

)

 

144,122

 

 

102,851

 

Total Investment Banking

 

986,824

 

 

943,566

 

 

571,828

 

 

3,444,787

 

 

2,272,218

 

Equities14

 

410,768

 

 

387,342

 

 

276,395

 

 

1,592,793

 

 

1,139,425

 

Fixed income

 

240,922

 

 

289,183

 

 

209,774

 

 

1,166,761

 

 

1,092,736

 

Total Capital Markets

 

651,690

 

 

676,525

 

 

486,169

 

 

2,759,554

 

 

2,232,161

 

Total Investment Banking and Capital Markets Net revenues5

 

1,638,514

 

 

1,620,091

 

 

1,057,997

 

 

6,204,341

 

 

4,504,379

 

Asset management fees and revenues6

 

13,752

 

 

13,261

 

 

18,695

 

 

103,488

 

 

93,678

 

Investment return

 

101,762

 

 

(40,135

)

 

62,892

 

 

212,209

 

 

154,461

 

Allocated net interest4

 

(15,104

)

 

(16,016

)

 

(14,568

)

 

(62,135

)

 

(49,519

)

Other investments, inclusive of net interest13

 

214,340

 

 

101,902

 

 

73,627

 

 

550,107

 

 

(10,275

)

Total Asset Management Net revenues

 

314,750

 

 

59,012

 

 

140,646

 

 

803,669

 

 

188,345

 

Other

 

3,338

 

 

4,449

 

 

(1,437

)

 

26,793

 

 

7,693

 

Total Net revenues by source

$

1,956,602

 

$

1,683,552

 

$

1,197,206

 

$

7,034,803

 

$

4,700,417

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

Compensation and benefits

$

981,626

 

$

889,098

 

$

612,287

 

$

3,659,588

 

$

2,535,272

 

Compensation ratio15

 

50.2

%

 

52.8

%

 

51.1

%

 

52.0

%

 

53.9

%

Non-compensation expenses

$

670,114

 

$

541,767

 

$

497,658

 

$

2,369,669

 

$

1,810,876

 

Non-compensation ratio15

 

34.2

%

 

32.2

%

 

41.6

%

 

33.7

%

 

38.5

%

Total expenses

$

1,651,740

 

$

1,430,865

 

$

1,109,945

 

$

6,029,257

 

$

4,346,148

 

 

 

 

 

 

 

Net earnings from continuing operations before income taxes

$

304,862

 

$

252,687

 

$

87,261

 

$

1,005,546

 

$

354,269

 

Income tax expense

$

86,117

 

$

78,011

 

$

16,828

 

$

293,194

 

$

91,881

 

Income tax rate

 

28.2

%

 

30.9

%

 

19.3

%

 

29.2

%

 

25.9

%

Net earnings from continuing operations

$

218,745

 

$

174,676

 

$

70,433

 

$

712,352

 

$

262,388

 

Net earnings from discontinued operations (including gain on disposal), net of income taxes

 

5,155

 

 

6,363

 

 

—

 

 

3,667

 

 

—

 

Net losses attributable to noncontrolling interests

 

(8,262

)

 

(6,874

)

 

(1,506

)

 

(27,364

)

 

(14,846

)

Net losses attributable to redeemable noncontrolling interests

 

—

 

 

—

 

 

—

 

 

—

 

 

(454

)

Preferred stock dividends

 

26,416

 

 

20,785

 

 

6,300

 

 

74,110

 

 

14,616

 

Net earnings attributable to common shareholders

$

205,746

 

$

167,128

 

$

65,639

 

$

669,273

 

$

263,072

 

 

 

 

 

 

 

Quarterly Results 2024 Versus 2023

 

Year-to-Date Results 2024 Versus 2023

• Net earnings attributable to common shareholders of $206 million, or $0.91 per diluted common share from continuing operations.

• Return on adjusted tangible shareholders' equity from continuing operations1 of 12.7%.

• We had 205.5 million common shares outstanding and 253.9 million common shares outstanding on a fully diluted basis2 at November 30, 2024. Our book value per common share was $49.42 and tangible book value per fully diluted share3 was $32.36.

• Effective tax rate from continuing operations of 28.2% compared to 19.3% for the prior year quarter. The lower rate for the prior year quarter was driven by the release of certain tax reserves which was not repeated in the current year quarter.

 

• Net earnings attributable to common shareholders of $669 million, or $2.96 per diluted common share from continuing operations.

• Return on adjusted tangible shareholders' equity from continuing operations1 of 10.8%.

• Repurchased 1.1 million shares of common stock for $44 million, at an average price of $40.72 per share in connection with net-share settlements related to our equity compensation plans.

• Effective tax rate from continuing operations of 29.2% compared to 25.9% for the prior year period.

Investment Banking and Capital Markets

 

Investment Banking and Capital Markets

• Investment Banking net revenues of $987 million were 73% higher than the prior year quarter, with particular strength in Advisory.

• Advisory net revenues of $597 million represents our best quarter ever, due to market share gains and increased global mergers and acquisitions activity.

• Underwriting net revenues of $363 million were higher than the prior year quarter, due to market share gains and increased activity from both equity and debt underwriting.

• Capital Markets net revenues of $652 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 increased primarily reflecting stronger results across our credit trading businesses.

 

• Investment Banking net revenues of $3.44 billion were 52% higher than the prior year, with strength across all lines of business attributable primarily to market share gains and a stronger overall market for our services.

• Advisory net revenues of $1.81 billion were higher than prior year period, attributable primarily to market share gains and increased overall market opportunity.

• Underwriting net revenues of $1.49 billion increased from the prior year period, due to increased activity from both equity and debt underwriting. Momentum in the equity markets was compounded by continued market share gains.

• Capital Markets net revenues of $2.76 billion were higher compared to the prior year period primarily driven by stronger Equities net revenues attributable to continued market share gains and overall increased levels of activity during the period. Fixed Income net revenues increased from the prior year period driven by strong results in our distressed trading and securitization business, partially offset by less favorable results in our global structured solutions business.

Asset Management

 

Asset Management

• Asset Management fees and revenues and investment return of $116 million were substantially higher than the prior year quarter, reflecting strong investment return performance from a number of strategies. In addition, Other investments13 net revenues were meaningfully higher, primarily due to the consolidation of Tessellis, as well as asset sales at HomeFed.

 

• Asset Management fees and revenues and investment return of $316 million were substantially higher than the prior year period, reflecting fee growth and strong overall performance from multiple strategies, even with challenges arising from the Weiss Multi-Strategy and 352 Capital funds. In addition, Other investments13 net revenues were meaningfully higher than the prior year period largely due to the consolidation of Stratos and Tessellis.

Expenses

 

Expenses

• Compensation and benefits expense as a percentage of Net revenues was 50.2%, compared to 51.1% for the prior year period.

• Non-compensation expenses were higher primarily due to costs associated with brokerage and clearing fees associated with increased trading volumes, and higher technology and communications and business development expenses. In addition, the increase in Non-Compensation expenses reflects the inclusion of Tessellis as an operating subsidiary following its consolidation at the end of the fourth quarter of 2023 and higher cost of sales largely from the sale of certain assets by HomeFed.

 

 

• Compensation and benefits expense as a percentage of Net revenues was 52.0%, compared to 53.9% for the prior year period.

• Non-compensation expenses were higher primarily due to increased brokerage and clearing fees associated with increased trading volumes and higher technology and communication and business development expenses. Other expenses include bad debt expenses largely related to our losses associated with Weiss Multi-Strategy Advisers, LLC upon its shutdown in the first quarter of 2024. In addition, the increase in Non-compensation expenses reflects the inclusion of Stratos and Tessellis as operating subsidiaries following the consolidation of these entities in the fourth quarter of 2023, partially offset by the impact of the spin-off of Vitesse Energy in January 2023 and sale of Foursight in April 2024. Non-compensation expenses as a percentage of Net revenues improved from 38.5% in 2023 to 33.7% in 2024 as our revenue growth outpaced expense growth. The ratio includes our Other investments portfolio, which has higher non-compensation expense ratios.

 

Amounts herein pertaining to November 30, 2024 represent a preliminary estimate as of the date of this earnings release and may be revised upon filing our Annual Report on Form 10-K with the Securities and Exchange Commission (“SEC”). More information on our results of operations for the year ended November 30, 2024 will be provided upon filing our Annual Report on Form 10-K with the SEC, which we expect to file on or about January 28, 2025.

This press release contains certain “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on current views and 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,” "would," 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 may 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. We undertake no obligation to update or revise any such forward-looking statement to reflect subsequent circumstances.

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

Year Ended November 30,

 

 

2024

 

 

2023

 

Revenues

 

 

Investment banking

$

3,309,060

 

$

2,169,366

 

Principal transactions

 

1,816,963

 

 

1,413,283

 

Commissions and other fees

 

1,085,349

 

 

905,665

 

Asset management fees and revenues

 

86,106

 

 

82,574

 

Interest

 

3,543,497

 

 

2,868,674

 

Other

 

674,094

 

 

1,837

 

Total revenues

 

10,515,069

 

 

7,441,399

 

Interest expense

 

3,480,266

 

 

2,740,982

 

Net revenues

 

7,034,803

 

 

4,700,417

 

Non-interest expenses

 

 

Compensation and benefits

 

3,659,588

 

 

2,535,272

 

Brokerage and clearing fees

 

432,721

 

 

366,702

 

Underwriting costs

 

68,492

 

 

61,082

 

Technology and communications

 

546,655

 

 

477,028

 

Occupancy and equipment rental

 

118,611

 

 

106,051

 

Business development

 

283,459

 

 

177,541

 

Professional services

 

296,204

 

 

266,447

 

Depreciation and amortization

 

190,326

 

 

112,201

 

Cost of sales

 

206,283

 

 

29,435

 

Other expenses

 

226,918

 

 

214,389

 

Total non-interest expenses

 

6,029,257

 

 

4,346,148

 

Earnings from continuing operations before income taxes

 

1,005,546

 

 

354,269

 

Income tax expense

 

293,194

 

 

91,881

 

Net earnings from continuing operations

 

712,352

 

 

262,388

 

Net earnings from discontinued operations (including gain on disposal), net of income tax

 

3,667

 

 

—

 

Net earnings

 

716,019

 

 

262,388

 

Net losses attributable to noncontrolling interests

 

(27,364

)

 

(14,846

)

Net losses attributable to redeemable noncontrolling interests

 

—

 

 

(454

)

Preferred stock dividends

 

74,110

 

 

14,616

 

Net earnings attributable to common shareholders

$

669,273

 

$

263,072

 

 

 

 

Financial Data and Metrics (Unaudited)

 

 

Three Months Ended

Year Ended

 

November 30, 2024

August 31, 2024

November 30, 2023

November 30, 2024

November 30, 2023

Other Data:

 

 

 

 

 

Number of trading days

 

63

 

63

 

63

 

251

 

251

Number of trading loss days7

 

8

 

 

7

 

 

7

 

 

19

 

 

26

 

Average VaR (in millions)8

$

12.75

 

$

11.35

 

$

12.36

 

$

13.13

 

$

13.57

 

In millions, except other data

Three Months Ended

 

November 30, 2024

August 31, 2024

November 30, 2023

Financial position:

 

 

 

Total assets

$

64,360

 

$

63,275

 

$

57,905

 

Cash and cash equivalents

 

12,153

 

 

10,573

 

 

8,526

 

Financial instruments owned

 

24,138

 

 

24,039

 

 

21,747

 

Level 3 financial instruments owned9

 

734

 

693

 

681

Goodwill and intangible assets

 

2,054

 

 

2,073

 

 

2,045

 

Total equity

 

10,225

 

 

10,115

 

 

9,802

 

Total shareholders' equity

 

10,157

 

 

10,046

 

 

9,710

 

Tangible shareholders' equity10

 

8,103

 

 

7,973

 

 

7,665

 

Other data and financial ratios:

 

 

 

Leverage ratio11

 

6.3

 

 

6.3

 

 

5.9

 

Tangible gross leverage ratio12

 

7.7

 

 

7.7

 

 

7.3

 

Number of employees at period end

 

7,822

 

 

7,624

 

 

7,564

 

Number of employees excluding OpNet, Tessellis and Stratos at period end

 

5,968

 

 

5,926

 

 

5,661

 

Components of Numerators and Denominators for Earnings Per Common Share

 

$ in thousands, except per share amounts

Three Months Ended November 30,

Year Ended November 30,

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Numerator for earnings per common share from continuing operations:

 

 

 

 

Net earnings from continuing operations

$

218,746

 

$

70,433

 

$

712,352

 

$

262,388

 

Less: Net losses attributable to noncontrolling interests

 

(7,826

)

 

(1,506

)

 

(24,367

)

 

(15,300

)

Mandatorily redeemable convertible preferred share dividends

 

—

 

 

—

 

 

—

 

 

(2,016

)

Allocation of earnings to participating securities

 

(26,416

)

 

(6,389

)

 

(74,110

)

 

(14,729

)

Net earnings from continuing operations attributable to common shareholders for basic earnings per share

$

200,156

 

$

65,550

 

$

662,609

 

$

260,943

 

Net earnings from continuing operations attributable to common shareholders for diluted earnings per share

$

200,156

 

$

65,550

 

$

662,609

 

$

260,943

 

 

 

 

 

 

Numerator for earnings per common share from discontinued operations:

 

 

 

 

Net earnings from discontinued operations (including gain on disposal), net of taxes

$

5,155

 

$

—

 

$

3,667

 

$

—

 

Less: Net losses attributable to noncontrolling interests

 

(436

)

 

—

 

 

(2,997

)

 

—

 

Net earnings from discontinued operations attributable to common shareholders for basic and diluted earnings per share

$

5,591

 

$

—

 

$

6,664

 

$

—

 

Net earnings attributable to common shareholders for basic earnings per share

$

205,747

 

$

65,550

 

$

669,273

 

$

260,943

 

Net earnings attributable to common shareholders for diluted earnings per share

$

205,747

 

$

65,550

 

$

669,273

 

$

260,943

 

 

 

 

 

 

Denominator for earnings per common share:

 

 

 

 

Weighted average common shares outstanding

 

205,499

 

 

210,505

 

 

208,873

 

 

222,325

 

Weighted average shares of restricted stock outstanding with future service required

 

(2,298

)

 

(1,907

)

 

(2,334

)

 

(1,920

)

Weighted average restricted stock units outstanding with no future service required

 

10,546

 

 

11,843

 

 

10,540

 

 

12,204

 

Weighted average basic common shares

 

213,747

 

 

220,441

 

 

217,079

 

 

232,609

 

Stock options and other share-based awards

 

4,968

 

 

2,224

 

 

3,638

 

 

2,085

 

Senior executive compensation plan restricted stock unit awards

 

3,619

 

 

1,919

 

 

2,933

 

 

1,926

 

Weighted average diluted common shares

 

222,334

 

 

224,584

 

 

223,650

 

 

236,620

 

 

 

 

 

 

Earnings per common share:

 

 

 

 

Basic from continuing operations

$

0.94

 

$

0.30

 

$

3.05

 

$

1.12

 

Basic from discontinued operations

 

0.02

 

 

—

 

 

0.03

 

 

—

 

Basic

$

0.96

 

$

0.30

 

$

3.08

 

$

1.12

 

Diluted from continuing operations

$

0.91

 

$

0.29

 

$

2.96

 

$

1.10

 

Diluted from discontinued operations

 

0.02

 

 

—

 

 

0.03

 

 

—

 

Diluted

$

0.93

 

$

0.29

 

$

2.99

 

$

1.10

 

Non-GAAP Reconciliations

The following tables reconcile our non-GAAP financial measures to their respective U.S. GAAP financial measures. Management believes such non-GAAP financial measures are useful to investors as they allow them to view our results through the eyes of management, while facilitating a comparison across historical periods. These measures should not be considered a substitute for, or superior to, measures prepared in accordance with U.S. GAAP.

Return on Adjusted Tangible Equity Reconciliation

 

$ in thousands

Three Months Ended November 30,

Year Ended November 30,

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Net earnings attributable to common shareholders (GAAP)

$

205,747

 

$

65,639

 

$

669,273

 

$

263,072

 

Intangible amortization and impairment expense, net of tax

 

5,871

 

 

1,939

 

 

21,771

 

 

6,638

 

Adjusted net earnings to common shareholders (non-GAAP)

 

211,618

 

 

67,578

 

 

691,044

 

 

269,710

 

Preferred stock dividends

 

26,416

 

 

6,300

 

 

74,110

 

 

14,616

 

Adjusted net earnings to total shareholders (non-GAAP)

$

238,034

 

$

73,878

 

$

765,154

 

$

284,326

 

 

 

 

 

 

Adjusted net earnings to total shareholders (non-GAAP)1

$

952,136

 

$

295,512

 

$

765,154

 

$

284,326

 

 

 

 

 

 

Net earnings impact for net (earnings) losses from discontinued operations, net of noncontrolling interests

 

(5,591

)

 

—

 

 

(6,664

)

 

—

 

Adjusted net earnings to total shareholders from continuing operations (non-GAAP)

 

232,443

 

 

73,878

 

 

758,490

 

 

284,326

 

Adjusted net earnings to total shareholders from continuing operations (non-GAAP)1

 

929,772

 

 

295,512

 

 

758,490

 

 

284,326

 

 

 

 

 

 

 

August 31,

November 30,

 

 

2024

 

 

2023

 

 

2023

 

 

2022

 

Shareholders' equity (GAAP)

$

10,045,945

 

$

9,698,847

 

$

9,709,827

 

$

10,232,845

 

Less: Intangible assets, net and goodwill

 

(2,073,105

)

 

(1,872,144

)

 

(2,044,776

)

 

(1,875,576

)

Less: Deferred tax asset, net

 

(572,772

)

 

(573,630

)

 

(458,343

)

 

(387,862

)

Less: Weighted average impact of dividends and share repurchases

 

(58,519

)

 

(50,727

)

 

(199,572

)

 

(732,517

)

Adjusted tangible shareholders' equity (non-GAAP)

$

7,341,549

 

$

7,202,346

 

$

7,007,136

 

$

7,236,890

 

 

 

 

 

 

Return on adjusted tangible shareholders' equity (non-GAAP)1

 

13.0

%

 

4.1

%

 

10.9

%

 

3.9

%

Return on adjusted tangible shareholders' equity from continuing operations (non-GAAP)1

 

12.7

%

 

4.1

%

 

10.8

%

 

3.9

%

Adjusted Tangible Book Value and Fully Diluted Shares Outstanding GAAP 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

November 30, 2024

Book value (GAAP)

$

10,156,772

 

Stock options(1)

 

114,939

 

Intangible assets, net and goodwill

 

(2,054,310

)

Adjusted tangible book value (non-GAAP)

$

8,217,401

 

 

 

Common shares outstanding (GAAP)

 

205,504

 

Preferred shares

 

27,563

 

Restricted stock units ("RSUs")

 

14,381

 

Stock options(1)

 

5,065

 

Other

 

1,388

 

Adjusted fully diluted shares outstanding (non-GAAP)(2)

 

253,901

 

 

 

Book value per common share outstanding

$

49.42

 

Adjusted tangible book value per fully diluted share outstanding (non-GAAP)

$

32.36

 

(1)

 

Stock options added to book value are equal to the total number of stock options outstanding as of November 30, 2024 of 5.1 million multiplied by the weighted average exercise price of $22.69 on November 30, 2024.

(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

1. Return on adjusted tangible shareholders' equity and Return on adjusted tangible shareholders' equity from continuing operations represent non-GAAP financial measures. The quarterly periods are based on annualized amounts. Refer to schedule on page 9 for a reconciliation to U.S. GAAP amounts.
2. 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 10 for a reconciliation to U.S. GAAP amounts.
3. 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 10 for a reconciliation to U.S. GAAP amounts.
4. 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.
5. 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.
6. 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.
7. 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.
8. 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.
9. 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.
10. 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.
11. Leverage ratio equals total assets divided by total equity.
12. 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.
13. Beginning in fiscal 2024, we now refer to "Merchant banking" as “Other investments” in our Asset Management reportable segment.
14. 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.
15. Compensation ratio equals total compensation expense divided by total net revenues. Non-compensation ratio equals total non-compensation expense divided by total net revenues.

 

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FOR MORE INFORMATION Jonathan Freedman 212.778.8913