JEF Jefferies Financial Group Inc

Quarterly Dividend Increased 16.7% to $0.35 Per Common Share

Jefferies Financial Group Inc. (NYSE: JEF):

Q2 Financial Highlights

• Net earnings attributable to common shareholders of $146 million, or $0.64 per diluted common share. Our pre-tax income for the quarter was $228 million
• Annualized return on adjusted tangible shareholders' equity1 of 9.2%
• Net revenues of $1.66 billion
  • Investment Banking net revenues of $803 million
  • Capital Markets net revenues of $691 million
  • Asset Management net revenues (before allocated net interest4) of $173 million
• At May 31, 2024, we had 212.1 million common shares outstanding and 253.7 million shares outstanding on a fully diluted basis2. Our book value per common share was $46.57 and adjusted tangible book value per fully diluted share3 was $31.27 at May 31, 2024

Increased Quarterly Cash Dividend

The Jefferies Board of Directors declared a quarterly cash dividend equal to $0.35 per Jefferies common share, a 16.7% increase from the prior dividend rate, payable on August 30, 2024 to record holders of Jefferies common shares on August 19, 2024.

Management Comments

“Our second quarter net revenues of $1.66 billion reflect continued positive momentum in Investment Banking and another solid quarter in Capital Markets, with particularly strong performance in Equities.

"Investment Banking net revenues of $803 million were up 8.6% from the prior quarter and 59.4% from the same quarter last year across all lines of business. Overall, momentum continues to build across our Investment Banking business, as the market opportunity improves and the investment we have made in our platform translates to increased market share. We are increasingly optimistic about the second half of 2024 and 2025 based on our backlog and trends we observe today.

"Capital Markets net revenues of $691 million were modestly lower than the prior quarter and up 24.1% versus the same quarter last year, with strength in Equities offsetting a moderation in Fixed Income after its strong first quarter.

"Asset Management had a reasonable performance, as market conditions for trading in certain of our strategies normalized after a strong first quarter.

"Our performance this year across business lines has resulted in improved operating margins versus last year. We expect margins to continue to improve as we realize the full potential of investments we have made in our Investment Banking platform and the market for investment banking activity continues to strengthen. We believe margins also will benefit over time from maintaining a strong discipline around expenses and leveraging investments made in technology that drive innovation, increase productivity, and strengthen our offerings and capabilities.

"Overall, we feel very positive about the direction and prospects of Jefferies. Our alliance with SMBC continues to gain momentum, we closed on the sale of Foursight, we continue to make smart investments in technology that will support our future growth and, most importantly, we have an incredible culture of delivering for our clients, while supporting our people and our communities. In light of all this, our Board of Directors has increased our quarterly dividend 16.7% to $0.35 per common share."

Richard Handler, CEO, and Brian Friedman, President

Financial Summary

$ in thousands, except per share amounts

Three Months Ended May 31,

 

 

 

Six Months Ended May 31,

 

 

 

 

2024

 

 

 

202313

 

 

% Change

 

 

2024

 

 

 

202313

 

 

% Change

Net revenues:

 

 

 

 

 

 

 

 

 

Investment Banking and Capital Markets

$

1,494,447

 

 

$

1,061,019

 

41

%

 

$

2,945,735

 

 

$

2,278,151

 

29

%

Asset Management

 

156,524

 

 

 

(30,899

)

N/M

 

 

 

429,907

 

 

 

37,556

 

N/M

 

Other

 

5,474

 

 

 

7,490

 

(27

)%

 

 

19,006

 

 

 

5,395

 

252

%

Net revenues

 

1,656,445

 

 

 

1,037,610

 

60

%

 

 

3,394,648

 

 

 

2,321,102

 

46

%

Net earnings from continuing operations before income taxes

 

227,754

 

 

 

17,919

 

N/M

 

 

 

447,996

 

 

 

175,937

 

155

%

Income tax expense

 

73,107

 

 

 

9,235

 

692

%

 

 

129,066

 

 

 

37,929

 

240

%

Net earnings from continuing operations

 

154,647

 

 

 

8,684

 

N/M

 

 

 

318,930

 

 

 

138,008

 

131

%

Net income (losses) from discontinued operations, net of income taxes

 

40

 

 

 

—

 

N/M

 

 

 

(7,851

)

 

 

—

 

N/M

 

Net earnings

 

154,687

 

 

 

8,684

 

N/M

 

 

 

311,079

 

 

 

138,008

 

125

%

Net losses attributable to noncontrolling interests

 

(4,790

)

 

 

(3,513

)

36

%

 

 

(12,228

)

 

 

(9,568

)

28

%

Net losses attributable to redeemable noncontrolling interests

 

—

 

 

 

(198

)

(100

)%

 

 

—

 

 

 

(454

)

(100

)%

Preferred stock dividends

 

13,741

 

 

 

—

 

N/M

 

 

 

27,930

 

 

 

2,016

 

N/M

 

Net earnings attributable to common shareholders

$

145,736

 

 

$

12,395

 

N/M

 

 

$

295,377

 

 

$

146,014

 

102

%

 

 

 

 

 

 

 

 

 

 

Earnings (losses) per common share:

 

 

 

 

 

 

 

 

 

Basic from continuing operations

$

0.66

 

 

$

0.05

 

N/M

 

 

$

1.37

 

 

$

0.60

 

128

%

Basic from discontinued operations

 

—

 

 

 

—

 

N/M

 

 

 

(0.03

)

 

 

—

 

N/M

 

Basic

$

0.66

 

 

$

0.05

 

N/M

 

 

$

1.34

 

 

$

0.60

 

124

%

Diluted from continuing operations

$

0.64

 

 

$

0.05

 

N/M

 

 

$

1.34

 

 

$

0.60

 

123

%

Diluted from discontinued operations

 

—

 

 

 

—

 

N/M

 

 

 

(0.03

)

 

 

—

 

N/M

 

Diluted

$

0.64

 

 

$

0.05

 

N/M

 

 

$

1.31

 

 

$

0.60

 

118

%

 

 

 

 

 

 

 

 

 

 

Weighted average common shares

 

219,971

 

 

 

242,568

 

 

 

 

219,935

 

 

 

240,825

 

 

Weighted average diluted common shares

 

226,146

 

 

 

245,413

 

 

 

 

225,587

 

 

 

246,870

 

 

 

N/M — Not Meaningful

Highlights

Three Months Ended May 31, 2024

 

Six Months Ended May 31, 2024

 

 

 

• Net earnings attributable to common shareholders of:
  • $146 million, or $0.64 per diluted common share
  • $145 million, or $0.64 per diluted common share, from continuing operations
• Annualized return on adjusted tangible shareholders' equity1 of 9.2%
• We had 212.1 million common shares outstanding and 253.7 million common shares outstanding on a fully diluted basis2 at May 31, 2024. Our book value per common share was $46.57 and tangible book value per fully diluted share3 was $31.27 at May 31, 2024.
• Effective tax rate of 32.1%. The lower tax rate compared to the same quarter last year of 51.5% is primarily due to the higher amount of pre-tax income in the current quarter.

 

• Net earnings attributable to common shareholders of:
  • $295 million, or $1.31 per diluted common share
  • $301 million, or $1.34 per diluted common share, from continuing operations
• Annualized return on adjusted tangible shareholders' equity1 of 9.4%.
• Repurchased 1.1 million shares of common stock for $44 million, at an average price of $40.66 per share in connection with net-share settlements related to our equity compensation plans.
• Effective tax rate of 28.8%. The higher tax rate compared to the prior year of 21.6% is primarily due to the recognition of a smaller excess tax benefit on restricted stock distributed during the current year.

Investment Banking and Capital Markets

 

Investment Banking and Capital Markets

• Investment Banking net revenues of $803 million were higher than the prior year comparable period, with strength across all lines of business.
• Advisory net revenues of $284 million and equity and debt underwriting net revenues of $455 million were higher than the same quarter last year, attributable primarily to market share gains.
• Underwriting net revenues of $455 million increased from the same quarter last year, due to increased equity underwriting as equity markets remained robust driving increased overall market volumes, as well as due to our expanded capabilities and enhanced market position. Debt underwriting activity improved as interest rates and inflationary concerns continued to stabilize.
• Capital Markets net revenues of $691 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 remained flat with the comparable prior year.

 

• Investment Banking net revenues were $1.54 billion, a 45% increase, with strength in all lines of business attributable primarily to increased market share.
• Advisory net revenues of $622 million and equity and debt underwriting net revenues of $793 million were higher than last year, attributable primarily to market share gains.
• Underwriting net revenues of $793 million increased from the prior year period, due to increased activity from both equity and debt underwriting as momentum from equity and leveraged finance markets benefited from continued market share gains.
• Capital Markets net revenues of $1.40 billion were higher compared to the prior year period primarily driven by stronger Equities net revenues attributable to continued market share gains during the period. Fixed Income net revenues remained consistent from the comparable prior year.

Asset Management

 

Asset Management

• Asset Management net revenues of $157 million were substantially higher than the prior year largely due to the consolidation of Stratos and Tessellis, which resulted in increased revenues, as well as the absence this year of losses in OpNet incurred in the prior year.

 

• Asset Management net revenues were $430 million, substantially higher than the prior year period, as Investment return net revenues improved due to strong performance across multiple investment strategies and funds. In addition, Other investments14 net revenues were meaningfully higher than the prior year largely due to the consolidation of Stratos and Tessellis which resulted in increased revenues offset by an increase in expenses.

Amounts herein pertaining to May 31, 2024 represent a preliminary estimate as of the date of this earnings release and may be revised upon filing our Quarterly Report on Form 10-Q with the Securities and Exchange Commission (“SEC”). More information on our results of operations for the three and six months ended May 31, 2024 will be provided upon filing our Quarterly Report on Form 10-Q with the SEC, which we expect to file on or about July 9, 2024.

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).

Selected Financial Information

$ in thousands (unaudited)

Quarter Ended

 

May 31, 2024

 

February 29, 2024

 

May 31, 202313

Net revenues by source:

 

 

 

 

 

Advisory

$

283,898

 

 

$

338,567

 

 

$

254,157

 

Equity underwriting

 

249,187

 

 

 

209,303

 

 

 

148,429

 

Debt underwriting

 

205,499

 

 

 

129,194

 

 

 

89,889

 

Total underwriting

 

454,686

 

 

 

338,497

 

 

 

238,318

 

Other investment banking

 

64,594

 

 

 

62,608

 

 

 

11,458

 

Total Investment Banking

 

803,178

 

 

 

739,672

 

 

 

503,933

 

Equities

 

407,092

 

 

 

359,138

 

 

 

278,691

 

Fixed income

 

284,177

 

 

 

352,478

 

 

 

278,395

 

Total Capital Markets

 

691,269

 

 

 

711,616

 

 

 

557,086

 

Total Investment Banking and Capital Markets Net revenues5

 

1,494,447

 

 

 

1,451,288

 

 

 

1,061,019

 

Asset management fees and revenues6

 

16,818

 

 

 

59,657

 

 

 

15,929

 

Investment return

 

32,942

 

 

 

117,640

 

 

 

32,477

 

Other investments, inclusive of net interest14

 

122,767

 

 

 

111,098

 

 

 

(66,180

)

Allocated net interest4

 

(16,003

)

 

 

(15,012

)

 

 

(13,125

)

Total Asset Management Net revenues

 

156,524

 

 

 

273,383

 

 

 

(30,899

)

Other

 

5,474

 

 

 

13,532

 

 

 

7,490

 

Total Net revenues by source

$

1,656,445

 

 

$

1,738,203

 

 

$

1,037,610

 

 

 

 

 

 

 

Non-interest expenses:

 

 

 

 

 

Compensation and benefits

$

861,993

 

 

$

926,871

 

 

$

575,868

 

Brokerage and clearing fees

 

110,536

 

 

 

109,670

 

 

 

96,592

 

Underwriting costs

 

18,552

 

 

 

18,484

 

 

 

13,169

 

Technology and communications

 

135,238

 

 

 

137,512

 

 

 

118,936

 

Occupancy and equipment rental

 

29,327

 

 

 

28,153

 

 

 

24,395

 

Business development

 

68,630

 

 

 

57,651

 

 

 

43,587

 

Professional services

 

75,493

 

 

 

77,844

 

 

 

68,514

 

Depreciation and amortization

 

49,946

 

 

 

43,202

 

 

 

25,310

 

Cost of sales

 

37,462

 

 

 

34,671

 

 

 

2,362

 

Other

 

41,514

 

 

 

83,903

 

 

 

50,958

 

Total Non-interest expenses

$

1,428,691

 

 

$

1,517,961

 

 

$

1,019,691

 

 

$ in thousands (unaudited)

Six Months Ended May 31,

 

 

2024

 

 

 

202313

 

Net revenues by source:

 

 

 

Advisory

$

622,465

 

 

$

551,335

 

Equity underwriting

 

458,490

 

 

 

273,874

 

Debt underwriting

 

334,693

 

 

 

170,064

 

Total underwriting

 

793,183

 

 

 

443,938

 

Other investment banking

 

127,202

 

 

 

71,504

 

Total Investment Banking

 

1,542,850

 

 

 

1,066,777

 

Equities

 

766,230

 

 

 

583,985

 

Fixed income

 

636,655

 

 

 

627,389

 

Total Capital Markets

 

1,402,885

 

 

 

1,211,374

 

Total Investment Banking and Capital Markets Net revenues5

 

2,945,735

 

 

 

2,278,151

 

Asset management fees and revenues6

 

76,475

 

 

 

58,625

 

Investment return

 

150,582

 

 

 

59,911

 

Other investments, inclusive of net interest14

 

233,865

 

 

 

(58,757

)

Allocated net interest4

 

(31,015

)

 

 

(22,223

)

Total Asset Management Net revenues

 

429,907

 

 

 

37,556

 

Other

 

19,006

 

 

 

5,395

 

Total Net revenues by source

$

3,394,648

 

 

$

2,321,102

 

 

 

 

 

Non-interest expenses:

 

 

 

Compensation and benefits

$

1,788,864

 

 

$

1,278,926

 

Brokerage and clearing fees

 

220,206

 

 

 

177,066

 

Underwriting costs

 

37,036

 

 

 

26,376

 

Technology and communications

 

272,750

 

 

 

232,321

 

Occupancy and equipment rental

 

57,480

 

 

 

51,710

 

Business development

 

126,281

 

 

 

80,425

 

Professional services

 

153,337

 

 

 

130,675

 

Depreciation and amortization

 

93,148

 

 

 

58,602

 

Cost of sales

 

72,133

 

 

 

4,530

 

Other

 

125,417

 

 

 

104,534

 

Total Non-interest expenses

$

2,946,652

 

 

$

2,145,165

 

 

 

 

 

Financial Data and Metrics

Unaudited

Quarter Ended

 

May 31,

2024

 

February 29,

2024

 

May 31,

2023

Other Data:

 

 

 

 

 

Number of trading days

 

64

 

 

 

61

 

 

 

64

 

Number of trading loss days7

 

1

 

 

3

 

 

10

Average VaR (in millions)8

$

13.36

 

 

$

15.13

 

 

$

15.14

 

 

 

 

 

 

 

 

 

 

Six Months Ended May 31,

 

 

 

 

2024

 

 

 

2023

 

Other Data:

 

 

 

 

 

Number of trading days

 

 

 

125

 

 

 

124

 

Number of trading loss days7

 

 

 

4

 

 

 

13

 

Average VaR (in millions)8

 

 

$

14.22

 

 

$

14.03

 

In millions, except other data (unaudited)

Quarter Ended

 

May 31,

2024

 

February 29,

2024

 

May 31,

2023

Financial position:

 

 

 

 

 

Total assets

$

63,001

 

 

$

60,933

 

 

$

53,740

 

Cash and cash equivalents

 

10,842

 

 

 

7,616

 

 

 

8,005

 

Financial instruments owned

 

22,787

 

 

 

23,212

 

 

 

21,002

 

Level 3 financial instruments owned9

 

691

 

 

 

589

 

 

 

860

 

Goodwill and intangible assets

 

2,057

 

 

 

2,064

 

 

 

1,873

 

Total equity

 

9,952

 

 

 

9,867

 

 

 

9,765

 

Total shareholders' equity

 

9,875

 

 

 

9,780

 

 

 

9,696

 

Tangible shareholders' equity10

 

7,818

 

 

7,716

 

 

7,823

Other data and financial ratios:

 

 

 

 

 

Leverage ratio11

 

6.3

 

 

 

6.2

 

 

 

5.5

 

Tangible gross leverage ratio12

 

7.8

 

 

 

7.6

 

 

 

6.6

 

Number of employees at period end

 

7,611

 

 

 

7,745

 

 

 

5,335

 

Number of employees excluding OpNet and Stratos at period end

 

5,635

 

 

 

5,790

 

 

 

5,335

 

 

Components of Numerators and Denominators for Earnings Per Common Share

 

 

Three Months Ended May 31,

 

Six Months Ended May 31,

In thousands, except per share amounts

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

Numerator for earnings per common share from continuing operations:

 

 

 

 

 

 

 

 

Net earnings from continuing operations

 

$

154,647

 

 

$

8,684

 

 

$

318,930

 

 

$

138,008

 

Less: Net losses attributable to noncontrolling interests

 

 

(3,785

)

 

 

(3,711

)

 

 

(10,237

)

 

 

(10,022

)

Mandatorily redeemable convertible preferred share dividends

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(2,016

)

Allocation of earnings to participating securities

 

 

(13,741

)

 

 

(4

)

 

 

(27,930

)

 

 

(830

)

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

 

$

144,691

 

 

$

12,391

 

 

$

301,237

 

 

$

145,184

 

Adjustment to allocation of earnings to participating securities related to diluted shares

 

 

—

 

 

 

(1

)

 

 

—

 

 

 

(31

)

Mandatorily redeemable convertible preferred share dividends

 

 

—

 

 

 

—

 

 

 

—

 

 

 

2,016

 

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

 

$

144,691

 

 

$

12,390

 

 

$

301,237

 

 

$

147,169

 

 

 

 

 

 

 

 

 

 

Numerator for earnings per common share from discontinued operations:

 

 

 

 

 

 

 

 

Net earnings (losses) from discontinued operations, net of taxes

 

$

40

 

 

$

—

 

 

$

(7,851

)

 

$

—

 

Less: Net losses attributable to noncontrolling interests

 

 

(1,005

)

 

 

—

 

 

 

(1,991

)

 

 

—

 

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

 

$

1,045

 

 

$

—

 

 

$

(5,860

)

 

$

—

 

Net earnings attributable to common shareholders for basic earnings per share

 

$

145,736

 

 

$

12,391

 

 

$

295,377

 

 

$

145,184

 

Net earnings attributable to common shareholders for diluted earnings per share

 

$

145,736

 

 

$

12,390

 

 

$

295,377

 

 

$

147,169

 

 

 

 

 

 

 

 

 

 

Denominator for earnings per common share:

 

 

 

 

 

 

 

 

Weighted average common shares outstanding

 

 

212,039

 

 

 

232,842

 

 

 

211,787

 

 

 

230,193

 

Weighted average shares of restricted stock outstanding with future service required

 

 

(2,329

)

 

 

(1,853

)

 

 

(2,366

)

 

 

(1,989

)

Weighted average restricted stock units outstanding with no future service required

 

 

10,261

 

 

 

11,579

 

 

 

10,514

 

 

 

12,621

 

Weighted average common shares

 

 

219,971

 

 

 

242,568

 

 

 

219,935

 

 

 

240,825

 

Stock options and other share-based awards

 

 

3,470

 

 

 

1,618

 

 

 

3,124

 

 

 

2,086

 

Senior executive compensation plan restricted stock unit awards

 

 

2,705

 

 

 

1,227

 

 

 

2,528

 

 

 

2,072

 

Mandatorily redeemable convertible preferred shares

 

 

—

 

 

 

—

 

 

 

—

 

 

 

1,887

 

Weighted average diluted common shares

 

 

226,146

 

 

 

245,413

 

 

 

225,587

 

 

 

246,870

 

 

 

 

 

 

 

 

 

 

Earnings (losses) per common share:

 

 

 

 

 

 

 

 

Basic from continuing operations

 

$

0.66

 

 

$

0.05

 

 

$

1.37

 

 

$

0.60

 

Basic from discontinued operations

 

 

—

 

 

 

—

 

 

 

(0.03

)

 

 

—

 

Basic

 

$

0.66

 

 

$

0.05

 

 

$

1.34

 

 

$

0.60

 

Diluted from continuing operations

 

$

0.64

 

 

$

0.05

 

 

$

1.34

 

 

$

0.60

 

Diluted from discontinued operations

 

 

—

 

 

 

—

 

 

 

(0.03

)

 

 

—

 

Diluted

 

$

0.64

 

 

$

0.05

 

 

$

1.31

 

 

$

0.60

 

 

Notes

1. Annualized return on adjusted tangible shareholders' equity represents a non-GAAP financial measure. Refer to schedule on page 11 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 12 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 12 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, 2023.
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. During the third quarter of 2023, we refined our allocated net interest methodology to better reflect net interest expense across our business units based on use of capital. As a result, the presentation of Net revenues and Net revenues by source has been recast to conform with the revised methodology.
14. Beginning in fiscal 2024, we now refer to "Merchant banking" as “Other investments” in our Asset Management reportable segment.

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.

Annualized Return on Adjusted Tangible Equity Reconciliation

 

 

Three Months Ended May 31,

 

Six Months Ended May 31,

$ in thousands

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

Net earnings attributable to common shareholders (GAAP)

 

$

145,736

 

 

$

12,395

 

 

$

295,377

 

 

$

146,014

 

Intangible amortization and impairment expense, net of tax

 

 

5,799

 

 

 

1,193

 

 

 

9,946

 

 

 

3,220

 

Adjusted net earnings to common shareholders (non-GAAP)

 

 

151,535

 

 

 

13,588

 

 

 

305,323

 

 

 

149,234

 

Preferred stock dividends

 

 

13,741

 

 

 

—

 

 

 

27,930

 

 

 

2,016

 

Adjusted net earnings to total shareholders (non-GAAP)

 

$

165,276

 

 

$

13,588

 

 

$

333,253

 

 

$

151,250

 

 

 

 

 

 

 

 

 

 

Annualized adjusted net earnings to total shareholders (non-GAAP)

 

$

661,104

 

 

$

54,352

 

 

$

666,506

 

 

$

302,500

 

 

 

 

 

 

 

 

 

 

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

 

 

(1,045

)

 

 

—

 

 

 

5,861

 

 

 

—

 

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

 

 

164,231

 

 

 

13,588

 

 

 

339,114

 

 

 

151,250

 

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

 

 

656,924

 

 

 

54,352

 

 

 

678,228

 

 

 

302,500

 

 

 

 

 

 

 

 

 

 

 

 

February 29,

 

November 30,

 

 

 

2024

 

 

 

2023

 

 

 

2023

 

 

 

2022

 

Shareholders' equity (GAAP)

 

$

9,780,097

 

 

$

9,755,243

 

 

$

9,709,827

 

 

$

10,232,845

 

Less: Intangible assets, net and goodwill

 

 

(2,063,956

)

 

 

(1,872,850

)

 

 

(2,044,776

)

 

 

(1,875,576

)

Less: Deferred tax asset, net

 

 

(466,468

)

 

 

(486,012

)

 

 

(458,343

)

 

 

(387,862

)

Less: Weighted average impact of dividends and share repurchases

 

 

(49,053

)

 

 

(70,895

)

 

 

(115,344

)

 

 

(195,393

)

Adjusted tangible shareholders' equity (non-GAAP)

 

$

7,200,620

 

 

$

7,325,486

 

 

$

7,091,364

 

 

$

7,774,014

 

 

 

 

 

 

 

 

 

 

Annualized return on adjusted tangible shareholders' equity (non-GAAP)

 

 

9.2

%

 

 

0.7

%

 

 

9.4

%

 

 

3.9

%

Annualized adjusted net earnings to shareholders on adjusted tangible shareholders' equity from continuing operations (non-GAAP)

 

 

9.1

%

 

 

0.7

%

 

 

9.6

%

 

 

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

May 31, 2024

Book value (GAAP)

$

9,875,056

 

Stock options(1)

 

114,939

 

Intangible assets, net and goodwill

 

(2,057,302

)

Adjusted tangible book value (non-GAAP)

$

7,932,693

 

 

 

Common shares outstanding (GAAP)

 

212,053

 

Preferred shares

 

21,000

 

Restricted stock units ("RSUs")

 

14,180

 

Stock options(1)

 

5,065

 

Other

 

1,365

 

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

 

253,663

 

 

 

Book value per common share outstanding

$

46.57

 

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

$

31.27

 

(1)

Stock options added to book value are equal to the total number of stock options outstanding as of May 31, 2024 of 5.1 million multiplied by the weighted average exercise price of $22.69 on May 31, 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 mandatorily convertible preferred shares if-converted to common shares.

 

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FOR MORE INFORMATION Jonathan Freedman 212.778.8913