Jefferies Group LLC today announced financial results for its fiscal second quarter 2015.
Highlights for the three months ended May 31, 2015, with adjusted amounts excluding the operating results of our Bache business:
- Investment banking net revenues of $404 million
- Total Net revenues of $792 million
- Total Adjusted Net revenues (excluding Bache net revenues) of $757 million
- Adjusted Net earnings (excluding Bache net loss) of $86 million
- Net earnings of $60 million (including Bache exit costs of $20 million on an after-tax basis)
Highlights for the six months ended May 31, 2015, with adjusted amounts excluding the operating results of our Bache business:
- Investment banking net revenues of $676 million
- Total Net revenues of $1,383 million
- Total Adjusted Net revenues (excluding Bache net revenues) of $1,299 million
- Adjusted Net earnings (excluding Bache net loss) of $106 million
- Net earnings of $73 million (including Bache exit costs of $20 million on an after-tax basis)
Richard B. Handler, Chairman and Chief Executive Officer, and Brian P. Friedman, Chairman of the Executive Committee, commented: “We are pleased to report quarterly revenues above those of the first quarter and the same period last year. Investment banking net revenues were in excess of $400 million, an increase of 49% compared to this year’s first quarter and 22% versus the second quarter last year. Our momentum has continued in investment banking and our current backlog for the third quarter is comparable to the backlog of three months ago. Our equity net revenues were strong versus the first quarter and the same quarter last year. Excluding Bache, Fixed income net revenues increased by 56% versus the slow first quarter, but declined by 29% compared to the year ago quarter. Fixed income results improved each month during the quarter. We continue to unwind the Bache business and to date have transferred about 50% of client accounts to Societe Generale and other brokers. We expect to have substantially completed the unwind of Bache by the end of the summer.”
The attached financial tables should be read in connection with our Quarterly Report on Form 10-Q for the quarter ended February 28, 2015 and our Annual Report on Form 10-K for the year ended November 30, 2014. Adjusted financial measures referenced above are non-GAAP financial measures, which management believes provide meaningful information to enable investors to evaluate the Company´s results in the context of exiting the Bache business. Refer to the Supplemental Schedules on pages 5-7 for a reconciliation of Adjusted measures to the respective direct U.S. GAAP financial measures.
Jefferies, the 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. The 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, 2015 | February 28, 2015 | May 31, 2014 | ||||||||||||
| Revenues: | ||||||||||||||
| Commissions | $ | 173,508 | $ | 166,922 | $ | 167,378 | ||||||||
| Principal transactions | 155,962 | 105,477 | 183,416 | |||||||||||
| Investment banking | 404,262 | 271,995 | 331,149 | |||||||||||
| Asset management fees and investment income (loss) from managed funds | 5,650 | (9,837 | ) | (3,101 | ) | |||||||||
| Interest income | 240,552 | 228,870 | 283,540 | |||||||||||
| Other revenues | 28,576 | 19,905 | 8,404 | |||||||||||
| Total revenues | 1,008,510 | 783,332 | 970,786 | |||||||||||
| Interest expense | 216,956 | 191,660 | 247,794 | |||||||||||
| Net revenues | 791,554 | 591,672 | 722,992 | |||||||||||
| Non-interest expenses: | ||||||||||||||
| Compensation and benefits | 480,770 | 365,215 | 404,876 | |||||||||||
| Non-compensation expenses: | ||||||||||||||
| Floor brokerage and clearing fees | 58,713 | 55,080 | 54,020 | |||||||||||
| Technology and communications | 72,361 | 72,387 | 70,257 | |||||||||||
| Occupancy and equipment rental | 24,420 | 24,184 | 26,673 | |||||||||||
| Business development | 26,401 | 21,937 | 24,917 | |||||||||||
| Professional services | 27,419 | 24,256 | 25,345 | |||||||||||
| Other | 16,758 | 15,729 | 17,767 | |||||||||||
| Total non-compensation expenses | 226,072 | 213,573 | 218,979 | |||||||||||
| Total non-interest expenses | 706,842 | 578,788 | 623,855 | |||||||||||
| Earnings before income taxes | 84,712 | 12,884 | 99,137 | |||||||||||
| Income tax expense | 24,530 | 331 | 37,323 | |||||||||||
| Net earnings | 60,182 | 12,553 | 61,814 | |||||||||||
| Net earnings attributable to noncontrolling interests | 349 | 871 | 488 | |||||||||||
| Net earnings attributable to Jefferies Group LLC | $ | 59,833 | $ | 11,682 | $ | 61,326 | ||||||||
| Pretax operating margin | 10.7 | % | 2.2 | % | 13.7 | % | ||||||||
| Effective tax rate | 29.0 | % | 2.6 | % | 37.6 | % | ||||||||
| JEFFERIES GROUP LLC AND SUBSIDIARIES | ||||||||||
| CONSOLIDATED STATEMENTS OF EARNINGS | ||||||||||
| (Amounts in Thousands) | ||||||||||
| (Unaudited) | ||||||||||
| Six Months Ended | ||||||||||
| May 31, 2015 | May 31, 2014 | |||||||||
| Revenues: | ||||||||||
| Commissions | $ | 340,430 | $ | 329,441 | ||||||
| Principal transactions | 261,439 | 421,779 | ||||||||
| Investment banking | 676,257 | 745,469 | ||||||||
| Asset management fees and investment income (loss) from managed funds | (4,187 | ) | 6,856 | |||||||
| Interest income | 469,422 | 532,808 | ||||||||
| Other revenues | 48,481 | 31,473 | ||||||||
| Total revenues | 1,791,842 | 2,067,826 | ||||||||
| Interest expense | 408,616 | 445,806 | ||||||||
| Net revenues | 1,383,226 | 1,622,020 | ||||||||
| Non-interest expenses: | ||||||||||
| Compensation and benefits | 845,985 | 912,775 | ||||||||
| Non-compensation expenses: | ||||||||||
| Floor brokerage and clearing fees | 113,793 | 103,533 | ||||||||
| Technology and communications | 144,748 | 134,563 | ||||||||
| Occupancy and equipment rental | 48,604 | 53,175 | ||||||||
| Business development | 48,338 | 51,393 | ||||||||
| Professional services | 51,675 | 50,164 | ||||||||
| Other | 32,487 | 35,011 | ||||||||
| Total non-compensation expenses | 439,645 | 427,839 | ||||||||
| Total non-interest expenses | 1,285,630 | 1,340,614 | ||||||||
| Earnings before income taxes | 97,596 | 281,406 | ||||||||
| Income tax expense | 24,861 | 104,200 | ||||||||
| Net earnings | 72,735 | 177,206 | ||||||||
| Net earnings attributable to noncontrolling interests | 1,220 | 3,448 | ||||||||
| Net earnings attributable to Jefferies Group LLC | $ | 71,515 | $ | 173,758 | ||||||
| Pretax operating margin | 7.1 | % | 17.3 | % | ||||||
| Effective tax rate | 25.5 | % | 37.0 | % | ||||||
| JEFFERIES GROUP LLC AND SUBSIDIARIES | |||||||||||||||
| CONSOLIDATED ADJUSTED SELECTED FINANCIAL DATA | |||||||||||||||
| (Amounts in Thousands) | |||||||||||||||
| (Unaudited) | |||||||||||||||
| Quarter Ended May 31, 2015 | |||||||||||||||
| GAAP | Adjustments | Adjusted | |||||||||||||
| Net revenues | $ | 791,554 | $ | 34,589 | (1) | $ | 756,965 | ||||||||
| Non-interest expenses: | |||||||||||||||
| Compensation and benefits | 480,770 | 34,473 | (2) | 446,297 | |||||||||||
| Non-compensation expenses | 226,072 | 38,536 | (3) | 187,536 | |||||||||||
| Total non-interest expenses | 706,842 | 73,009 | (4) | 633,833 | |||||||||||
| Operating income (loss) | $ | 84,712 | $ | (38,420 | ) | $ | 123,132 | ||||||||
| Net earnings (loss) | $ | 60,182 | $ | (25,940 | ) | $ | 86,122 | ||||||||
| Compensation ratio (a) | 60.7 | % | 59.0 | % | |||||||||||
| Quarter Ended February 28, 2015 | |||||||||||||||
| GAAP | Adjustments | Adjusted | |||||||||||||
| Net revenues | $ | 591,672 | $ | 49,933 | (1) | $ | 541,739 | ||||||||
| Non-interest expenses: | |||||||||||||||
| Compensation and benefits | 365,215 | 23,980 | (2) | 341,235 | |||||||||||
| Non-compensation expenses | 213,573 | 38,597 | (3) | 174,976 | |||||||||||
| Total non-interest expenses | 578,788 | 62,577 | 516,211 | ||||||||||||
| Operating income (loss) | $ | 12,884 | $ | (12,644 | ) | $ | 25,528 | ||||||||
| Net earnings (loss) | $ | 12,553 | $ | (6,961 | ) | $ | 19,514 | ||||||||
| Compensation ratio (a) | 61.7 | % | 63.0 | % | |||||||||||
| Quarter Ended May 31, 2014 | |||||||||||||||
| GAAP | Adjustments | Adjusted | |||||||||||||
| Net revenues | $ | 722,992 | $ | 50,734 | (1) | $ | 672,258 | ||||||||
| Non-interest expenses: | |||||||||||||||
| Compensation and benefits | 404,876 | 29,756 | (2) | 375,120 | |||||||||||
| Non-compensation expenses | 218,979 | 36,573 | (3) | 182,406 | |||||||||||
| Total non-interest expenses | 623,855 | 66,329 | 557,526 | ||||||||||||
| Operating income (loss) | $ | 99,137 | $ | (15,595 | ) | $ | 114,732 | ||||||||
| Net earnings (loss) | $ | 61,814 | $ | (8,341 | ) | $ | 70,155 | ||||||||
| Compensation ratio (a) | 56.0 | % | 55.8 | % | |||||||||||
| (a) Reconciliation of the compensation ratio for U.S. GAAP to Adjusted is a derivation of the reconciliation of the components above. |
| This presentation of Adjusted financial information is an unaudited non-GAAP financial measure. Adjusted financial information begins with information prepared in accordance with U.S. GAAP and then those results are adjusted to exclude the operations of the Company´s Bache business. The Company believes that the disclosed Adjusted measures and any adjustments thereto, when presented in conjunction with comparable U.S. GAAP measures are useful to investors as they enable investors to evaluate the Company´s results in the context of exiting the Bache business. These measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with U.S. GAAP. |
| JEFFERIES GROUP LLC AND SUBSIDIARIES | |||||||||||||||
| CONSOLIDATED ADJUSTED SELECTED FINANCIAL DATA | |||||||||||||||
| (Amounts in Thousands) | |||||||||||||||
| (Unaudited) | |||||||||||||||
| Six Months Ended May 31, 2015 | |||||||||||||||
| GAAP | Adjustments | Adjusted | |||||||||||||
| Net revenues | $ | 1,383,226 | $ | 84,522 | (1) | $ | 1,298,704 | ||||||||
| Non-interest expenses: | |||||||||||||||
| Compensation and benefits | 845,985 | 58,453 | (2) | 787,532 | |||||||||||
| Non-compensation expenses | 439,645 | 77,133 | (3) | 362,512 | |||||||||||
| Total non-interest expenses | 1,285,630 | 135,586 | (4) | 1,150,044 | |||||||||||
| Operating income (loss) | $ | 97,596 | $ | (51,064 | ) | $ | 148,660 | ||||||||
| Net earnings (loss) | $ | 72,735 | $ | (32,901 | ) | $ | 105,636 | ||||||||
| Compensation ratio (a) | 61.2 | % | 60.6 | % | |||||||||||
| &
| |||||||||||||||
