Jefferies Announces Fourth Quarter 2024 Financial Results

Quarterly Dividend Increased 14.3% to $0.40 Per Common Share

Jefferies Financial Group Inc. (NYSE:JEF):

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.

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).

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.

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