Jefferies Group LLC today announced financial results for its
fiscal second quarter 2017.
Highlights for the three months ended May 31, 2017:
- Total Net Revenues of $779 million
- Investment Banking Net Revenues of $352
million
- Total Equities and Fixed Income Net
Revenues of $430 million
- Earnings Before Income Taxes of $116
million
- Net Earnings of $70 million (40% tax
rate, primarily due to recent state and local tax legislation,
which added 6%)
Highlights for the six months ended May 31, 2017:
- Total Net Revenues of $1.6 billion
- Investment Banking Net Revenues of $760
million
- Total Equities and Fixed Income Net
Revenues of $809 million
- Earnings Before Income Taxes of $240
million
- Net Earnings of $184 million (24% tax
rate, primarily due to net foreign tax credits)
Rich Handler, Chairman and Chief Executive Officer, and Brian
Friedman, Chairman of the Executive Committee, commented: "Our
second quarter results reflect solid results in Investment Banking,
with $352 million in revenues, compared to $253 million for the
same quarter last year, primarily reflecting an improved
environment for debt and equity new issuance. Our Equities revenues
were $272 million, including a $96 million mark-to-market gain on
our 24% equity ownership of KCG Holdings Inc. This compares to $224
million for our second quarter of last year, which included a
markup in our KCG position of $56 million. During the quarter,
Virtu Financial agreed to buy KCG for cash in a transaction that is
expected to close during the third quarter. Excluding KCG, our core
equity sales and trading business enjoyed a solid quarter and,
despite quiet market activity and low volatility, our global cash
businesses continued to gain market share. Fixed Income revenues
were $159 million for the quarter as lower volumes and lower
volatility prevailed throughout much of the quarter. Our tax
expense for the quarter was $46 million, or about 40% of pre-tax
profits. Following recently enacted legislation from New York State
and New York City, our tax expense includes a net charge of $7
million that reflects the revaluation of a portion of our net
deferred tax asset, which was partially offset by current year
reduced state and local tax rates. The impact of this legislation
will reduce the income apportioned to these jurisdictions going
forward and thereby reduce our effective tax rate."
The attached financial tables should be read in conjunction with
our Quarterly Report on Form 10-Q for the quarter ended
February 28, 2017 and our Annual Report on Form 10-K for the
year ended November 30, 2016. Amounts herein pertaining to
May 31, 2017 represent a preliminary estimate as of the date
of this earnings release and may be revised in our Quarterly Report
on Form 10-Q for the quarter ended May 31, 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, a global, full-service 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 May 31, 2017 February 28, 2017 May 31,
2016 Revenues: Commissions and other fees $ 152,643 $
145,822 $ 146,157 Principal transactions 287,070 220,957 318,180
Investment banking 351,863 408,021 253,046 Asset management fees
and investment income (loss) from managed funds (2,697 ) 8,926
4,336 Interest 227,804 202,023 220,175 Other 22,272 24,048
(4,977 ) Total revenues 1,038,955 1,009,797 936,917 Interest
expense 259,661 214,284 217,509 Net revenues
779,294 795,513 719,408 Non-interest
expenses: Compensation and benefits 450,522 460,172 415,316
Non-compensation expenses: Floor brokerage and clearing fees 47,494
45,858 43,591 Technology and communications 67,478 65,507 66,499
Occupancy and equipment rental 23,594 25,815 24,926 Business
development 26,466 22,632 22,587 Professional services 26,413
32,124 29,526 Other 21,146 19,206 14,366 Total
non-compensation expenses 212,591 211,142 201,495
Total non-interest expenses 663,113 671,314
616,811 Earnings before income taxes 116,181 124,199 102,597
Income tax expense 46,391 10,179 48,655 Net
earnings 69,790 114,020 53,942 Net earnings attributable to
noncontrolling interests 39 1 44 Net earnings
attributable to Jefferies Group LLC $ 69,751 $ 114,019
$ 53,898 Pretax operating margin 14.9 % 15.6 %
14.3 % Effective tax rate (1) 39.9 % 8.2 % 47.4 % (1)
The effective tax rate for the three months ended February 28, 2017
reflects a $32 million, or 26%, net tax benefit, which resulted
from the repatriation of earnings, along with their associated
foreign tax credits, from certain foreign subsidiaries.
JEFFERIES GROUP LLC AND SUBSIDIARIES CONSOLIDATED
STATEMENTS OF EARNINGS (Amounts in Thousands)
(Unaudited) Six Months Ended May 31,
2017 May 31, 2016 Revenues: Commissions and other
fees $ 298,465 $ 301,981 Principal transactions 508,027 214,807
Investment banking 759,884 483,976 Asset management fees and
investment income from managed funds 6,229 13,866 Interest income
429,827 442,120 Other 46,320 (26,728 ) Total revenues
2,048,752 1,430,022 Interest expense 473,945 411,627
Net revenues 1,574,807 1,018,395 Non-interest
expenses: Compensation and benefits 910,694 765,059
Non-compensation expenses: Floor brokerage and clearing fees 93,352
84,070 Technology and communications 132,985 131,488 Occupancy and
equipment rental 49,409 49,511 Business development 49,098 47,441
Professional services 58,537 53,038 Other 40,352 35,067
Total non-compensation expenses 423,733 400,615
Total non-interest expenses 1,334,427 1,165,674
Earnings (loss) before income taxes 240,380 (147,279 )
Income tax expense (benefit) 56,570 (34,452 ) Net earnings
(loss) 183,810 (112,827 ) Net earnings attributable to
noncontrolling interests 40 88 Net earnings (loss)
attributable to Jefferies Group LLC $ 183,770 $ (112,915 )
Pretax operating margin 15.3 % (14.5 )% Effective tax rate
23.5 % 23.4 %
JEFFERIES GROUP LLC AND
SUBSIDIARIES SELECTED STATISTICAL INFORMATION
(Amounts in Thousands, Except Other Data) (Unaudited)
Quarter Ended May 31, 2017
February 28, 2017 May 31, 2016
Revenues by
Source
Equities $ 271,522 $ 156,714 $ 223,540 Fixed income 158,606
221,852 238,486 Total Equities and Fixed income
430,128 378,566 462,026 Equity 74,902
61,566 60,905 Debt 125,847 162,628 46,124
Capital markets 200,749 224,194 107,029 Advisory 151,114
183,827 146,017 Total Investment banking 351,863
408,021 253,046 Asset management fees
and investment income (loss) from managed funds: Asset management
fees 4,115 7,981 6,964 Investment income (loss) from managed funds
(6,812 ) 945 (2,628 ) Total (2,697 ) 8,926 4,336
Net revenues $ 779,294 $
795,513 $ 719,408
Other
Data
Number of trading days 64 60 64 Number of trading loss days 3 3 2
Number of trading loss days, excluding KCG 4 3 1 Average
firmwide VaR (in millions) (1) $ 9.21 $ 10.30 $ 8.25 Average
firmwide VaR, excluding KCG (in millions) (1) $ 8.81 $ 8.26 $ 6.04
(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) Six Months Ended May 31,
2017 May 31, 2016
Revenues by
Source
Equities $ 428,236 $ 225,285 Fixed income 380,458 295,268
Total Equities and Fixed income 808,694 520,553
Equity 136,468 104,904 Debt 288,475 103,397
Capital markets 424,943 208,301 Advisory 334,941
275,675 Total investment banking 759,884 483,976
Asset management fees and investment income (loss)
from managed funds: Asset management fees 12,096 18,169 Investment
income (loss) from managed funds (5,867 ) (4,303 ) Total 6,229
13,866
Net revenues $ 1,574,807
$ 1,018,395
Other
Data
Number of trading days 124 125 Number of trading loss days 6 19
Number of trading loss days excluding KCG 7 13 Average
firmwide VaR (in millions) (1) $ 9.74 $ 8.31 Average firmwide VaR
excluding KCG (in millions) (1) $ 8.55 $ 6.36 (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 May 31, 2017 February 28,
2017 May 31, 2016
Financial
position:
Total assets (1) $ 40,079 $ 37,703 $ 37,120 Average total assets
for the period (1) $ 45,650 $ 44,490 $ 43,549 Average total assets
less goodwill and intangible assets for the period (1) $ 43,806 $
42,644 $ 41,678 Cash and cash equivalents (1) $ 4,357 $
4,080 $ 2,839 Cash and cash equivalents and other sources of
liquidity (1) (2) $ 5,817 $ 5,886 $ 4,282 Cash and cash equivalents
and other sources of liquidity - % total assets (1) (2) 14.5 % 15.6
% 11.5 % Cash and cash equivalents and other sources of liquidity -
% total assets less goodwill and intangible assets (1) (2) 15.2 %
16.4 % 12.1 % Financial instruments owned (1) $ 13,881 $
13,253 $ 15,119 Goodwill and intangible assets (1) $ 1,844 $ 1,843
$ 1,871 Total equity (including noncontrolling interests) $
5,565 $ 5,472 $ 5,344 Total Jefferies Group LLC member's equity $
5,565 $ 5,472 $ 5,339 Tangible Jefferies Group LLC member's equity
(3) $ 3,721 $ 3,629 $ 3,468
Level 3 financial
instruments:
Level 3 financial instruments owned (1) (4) $ 312 $ 365 $ 436 Level
3 financial instruments owned - % total assets (1) 0.8 % 1.0 % 1.2
% Level 3 financial instruments owned - % total financial
instruments (1) 2.2 % 2.8 % 2.9 % Level 3 financial instruments
owned - % tangible Jefferies Group LLC member's equity (1) 8.4 %
10.1 % 12.6 %
Other data and
financial ratios:
Total long-term capital (1) (5) $ 10,762 $ 11,388 $ 10,729 Leverage
ratio (1) (6) 7.2 6.9 6.9 Adjusted leverage ratio (1) (7) 9.0 8.9
9.0 Tangible gross leverage ratio (1) (8) 10.3 9.9 10.2
Number of trading days 64 60 64 Number of trading loss days 3 3 2
Number of trading loss days, excluding KCG 4 3 1 Average firmwide
VaR (9) $ 9.21 $ 10.30 $ 8.25 Average firmwide VaR, excluding KCG
(9) $ 8.81 $ 8.26 $ 6.04 Number of employees, at period end
3,324 3,319 3,279
JEFFERIES GROUP LLC AND
SUBSIDIARIES FINANCIAL HIGHLIGHTS - FOOTNOTES (1)
Amounts pertaining to May 31, 2017 represent a preliminary estimate
as of the date of this earnings release and may be revised in our
Quarterly Report on Form 10-Q for the quarterly period ended May
31, 2017. (2) At May 31, 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 $1,149
million, in aggregate, and $311 million, being the total of the
estimated amount of additional secured financing that could be
reasonably expected to be obtained from our financial instruments
that are currently not pledged at reasonable financing haircuts.
The corresponding amounts included in other sources of liquidity at
February 28, 2017 were $1,308 million and $498 million,
respectively, and at May 31, 2016, were $1,096 million and $347
million, respectively. The amounts included in other sources of
liquidity at May 31, 2016 have been reduced by $322 million from
what was previously disclosed to reflect adjustments for certain
securities that have subsequently been identified to have been
encumbered. (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 Jefferies Group LLC member's
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 May 31, 2017, February 28, 2017
and May 31, 2016, total long-term capital includes our long-term
debt of $5,197 million, $5,915 million and $5,385 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) Adjusted leverage
ratio (a non-GAAP financial measure) equals adjusted assets divided
by tangible total equity, which equals total equity less goodwill
and identifiable intangible assets. Adjusted assets (a non-GAAP
financial measure) equals total assets less securities borrowed,
securities purchased under agreements to resell, cash and
securities segregated, goodwill and identifiable intangibles plus
financial instruments sold, not yet purchased (excluding derivative
liabilities). At May 31, 2017, February 28, 2017 and May 31, 2016,
adjusted assets were $33,634 million, $32,155 million and $31,173
million, respectively. We believe that adjusted assets is a
meaningful measure as it excludes certain assets that are
considered of lower risk as they are generally self-financed by
customer liabilities through our securities lending activities.
(8) 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. (9) 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/20170620005308/en/
Jefferies Group LLCPeregrine C. Broadbent, 212-284-2338Chief
Financial Officer
Leucadia (NYSE:LUK)
Historical Stock Chart
From Aug 2024 to Sep 2024
Leucadia (NYSE:LUK)
Historical Stock Chart
From Sep 2023 to Sep 2024