General

Jefferies Announces First Quarter 2022 Financial Results – Business Wire

NEW YORK–(BUSINESS WIRE)–Q1 Financial Highlights

  • Net income attributable to common shareholders of $327 million, or $1.23 per diluted share
  • Annualized return on adjusted tangible equity of 16.2%1
  • Total Investment Banking and Capital Markets and Asset Management Net Revenues of $1.54 billion
  • Quarterly Investment Banking net revenues of $1.00 billion
  • Combined Capital Markets net revenues of $480 million
  • Asset Management net revenues (before allocated net interest2) of $74 million
  • Repurchased 10.038 million shares of common stock for $364.2 million, or an average price of $36.28 per share, including 6.848 million shares of common stock in the open market for $250.0 million under our current Board of Directors authorization and 3.190 million shares of common stock for $114.2 million in connection with net-share settlements under our equity compensation plan
  • In the four year period starting January 2018, Jefferies has repurchased 137.292 million shares of common stock3 for $3.107 billion, or an average price of $22.63 per share; Jefferies has returned to shareholders $4.316 billion, or 43% of shareholders’ equity and 56% of tangible shareholders’ equity4 since January 2018
  • Our Board of Directors has authorized the repurchase in the future of an additional up to $250 million of our common stock

We are proud of our solid first quarter results which as expected, are down from our industry’s uniquely exceptional first quarter of 2021, but consistent with the new level of operating success Jefferies achieved for the last nine months of 2021. Our strong first quarter results reflect the breadth and depth of our platform, despite the challenging trading environment caused by the anticipated change in Fed policy that existed in December and January and exacerbated by the even more difficult capital markets conditions that began in February with the onset of the invasion of Ukraine. Despite the change in market tone, the performance in our Investment Banking business continues to reflect our increased market share, as continued momentum in our Advisory business led our results, with an increase of 75% over the prior year comparable quarter. Our debt underwriting net revenues were solid, while our equity underwriting results were lower than the same period last year, consistent with a reduction in industry-wide deal activity. The new issue markets are clearly more sensitive to the increase in volatility and while our investment banking backlog5 remains strong, our realization of this backlog is sensitive to market conditions.

Equities net revenues were impacted by market volatility and global instability. Fixed Income net revenues were lower, primarily due to lower trading volumes in the face of inflation concerns and interest rate uncertainty.

Asset Management net revenues reflect higher asset management fees, offset by lower investment returns and lower revenues from strategic affiliates as compared to the prior year quarter.

We have no operations in Russia and our exposure to Russia is otherwise immaterial.

Our Ukrainian Doing Good Global Trading Day on March 3rd raised more than $14 million, our largest fundraising effort ever. We are humbled by our clients, employees, shareholders and friends who have all come together in this show of support. The funds were distributed to 20 charities that are providing on the ground humanitarian aid and support to help the brave, courageous and inspirational people of Ukraine as they defend their lives, freedom and homes. We hope and pray for their fortitude and success. It should be crystal clear that Jefferies stands with the Ukrainian people.”

Richard Handler, CEO, and Brian Friedman, President

Quarterly Cash Dividend

The Jefferies Board of Directors declared a quarterly cash dividend equal to $0.30 per Jefferies common share, payable on May 27, 2022 to record holders of Jefferies common shares on May 16, 2022.

Financial Summary

(Dollars in thousands, except per share amounts)

Three Months Ended

February 28,

 

 

2022

 

2021 (6)

% Change

Net revenues:

 

 

 

 

Investment Banking and Capital Markets

$

1,481,818

 

 

$

1,987,496

 

(25

)%

Asset Management

 

59,956

 

 

 

229,202

 

(74

)%

Merchant Banking

 

189,535

 

 

 

267,004

 

(29

)%

Corporate

 

746

 

 

 

590

 

26

%

Consolidation Adjustments

 

(140

)

 

 

2,650

 

(105

)%

Net revenues

$

1,731,915

 

 

$

2,486,942

 

(30

)%

 

 

 

 

 

Income before income taxes

$

392,332

 

 

$

800,785

 

(51

)%

 

 

 

 

 

Net income attributable to common shareholders

$

327,447

 

 

$

582,435

 

(44

)%

 

 

 

 

 

Diluted earnings per share

$

1.23

 

 

$

2.13

 

(42

)%

 

 

 

 

 

Weighted average diluted shares

 

266,571

 

 

 

272,881

 

 

 

 

 

 

 

Annualized return on adjusted tangible equity1

 

16.2

%

 

 

33.3

%

 

Highlights

Three months ended February 28, 2022

  • Net income attributable to common shareholders of $327 million, or $1.23 per diluted share.
  • Repurchased 10.038 million shares of common stock for $364.2 million, or an average price of $36.28 per share, including 6.848 million shares of common stock in the open market for $250.0 million under our current Board of Directors authorization and 3.190 million shares of common stock for $114.2 million in connection with net-share settlements under our equity compensation plan.
  • We had 240.2 million shares outstanding and 267.2 million shares outstanding on a fully diluted basis7 at February 28, 2022. Our book value per share was $43.68 and tangible book value per fully diluted share 8 was $33.08 at February 28, 2022.
  • Our Board of Directors has authorized the repurchase in the future of an additional up to $250 million of our common stock.
  • Effective tax rate of 16.4%, primarily reflecting excess tax benefits from restricted stock unit conversions.

Investment Banking and Capital Markets

  • Investment Banking net revenues of $1.00 billion were driven by significantly higher quarterly advisory net revenues and higher results in debt underwriting as compared with the prior year quarter, offset by lower net revenues in equity underwriting.
  • Combined Capital Markets net revenues of $480 million were lower as compared to prior year quarter. Equities net revenues were significantly impacted by market volatility and global instability. In addition, the first quarter last year benefited from trading opportunities related to Special Purpose Acquisition Companies. Fixed Income results were impacted by lower trading volumes in the face of inflation concerns and interest rate uncertainty.

Asset Management

  • Asset Management net revenues reflect higher asset management fees, offset by lower investment returns and lower revenues from strategic affiliates as compared to the prior year quarter.

Legacy Merchant Banking

  • Merchant Banking results reflect strong results at Idaho Timber, offset by unrealized hedging losses at Vitesse and a decline in the value of several of our investments in public companies.

* * * *

Amounts herein pertaining to February 28, 2022 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 months ended February 28, 2022 will be provided upon filing our Quarterly Report on Form 10-Q with the SEC, which we expect to file on or about April 8, 2022.

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).

Notes

  1. Return on adjusted tangible equity (a non-GAAP financial measure) is defined as Jefferies’ annualized adjusted net income (a non-GAAP financial measure) divided by our beginning of period adjusted tangible shareholders’ equity (a non-GAAP financial measure). Refer to schedule on page 9 for reconciliation to U.S. GAAP amounts.
  2. 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 make clearer actual Investment return. Refer to Selected Financial and Statistical Information on pages 6 to 7.
  3. The 137.292 million common shares repurchased since January 2018 includes 133.449 million shares of common stock repurchased in the open market for $2.979 billion under our Board of Director authorizations and 3.843 million shares of common stock for $128.6 million repurchased in connection with net-share settlements under our equity compensation plan.
  4. Tangible shareholders’ equity (a non-GAAP financial measure), is defined as Jefferies Financial Group shareholders’ equity less Intangible assets, net and goodwill. Refer to schedule on page 9 for reconciliation to U.S. GAAP amounts.
  5. Backlog represents an estimate of our net revenues from expected future transactions. As an indicator of net revenues in a given future period, it is subject to limitations. The time frame for the realization of revenues from these expected transactions varies and is influenced by factors we do not control. Transactions not included in the estimate may occur, and expected transactions may also be modified or cancelled.
  6. In the first quarter of 2022, we transferred certain Merchant Banking net assets to our Investment Banking and Capital Markets and Asset Management segments. Prior year amounts have been reclassified to conform to current segment disclosure.
  7. Shares outstanding on a fully diluted basis (a non-GAAP financial measure) is defined as Jefferies common shares outstanding plus restricted stock units, stock options, conversion of redeemable convertible preferred shares and other shares. Refer to schedule on page 10 for reconciliation to U.S. GAAP amounts.
  8. 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 reconciliation to U.S. GAAP amounts.

Summary

(In thousands, except per share amounts) (Unaudited)

 

 

 

 

Three Months Ended

February 28,

 

2022

 

2021

Net revenues

$

1,731,915

 

 

$

2,486,942

 

Income before income taxes and loss related to associated companies

$

422,317

 

 

$

811,353

 

Loss related to associated companies

 

(29,985

)

 

 

(10,568

)

Income before income taxes

 

392,332

 

 

 

800,785

 

Income tax provision

 

64,357

 

 

 

218,236

 

Net income

 

327,975

 

 

 

582,549

 

Net loss attributable to the noncontrolling interests

 

969

 

 

 

743

 

Net loss attributable to the redeemable noncontrolling interests

 

573

 

 

 

769

 

Preferred stock dividends

 

(2,070

)

 

 

(1,626

)

Net income attributable to common shareholders

$

327,447

 

 

$

582,435

 

 

 

 

 

Basic earnings per common share attributable to Jefferies common shareholders:

 

 

 

Net income

$

1.26

 

 

$

2.17

 

 

 

 

 

Basic: weighted average shares

 

257,552

 

 

 

266,386

 

 

 

 

 

Diluted earnings per common share attributable to Jefferies common shareholders:

 

 

 

Net income

$

1.23

 

 

$

2.13

 

 

 

 

 

Diluted: weighted average shares

 

266,571

 

 

 

272,881

 

A summary of results for the three months ended February 28, 2022 is as follows (in thousands):

 

Investment

Banking and

Capital

Markets

 

Asset Management

 

Merchant Banking

 

Corporate

 

Parent Company Interest

 

Consolidation Adjustments

 

Total

Net revenues

$

1,481,818

 

$

59,956

 

 

$

189,535

 

 

$

746

 

 

$

 

 

$

(140

)

 

$

1,731,915

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of sales

 

 

 

 

 

 

95,671

 

 

 

 

 

 

 

 

 

 

 

 

95,671

 

Compensation and benefits

 

724,276

 

 

19,936

 

 

39,323

 

 

 

6,149

 

 

 

 

 

 

 

 

 

789,684

 

Non-compensation expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

Floor brokerage and clearing fees

 

72,166

 

 

11,795

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

83,961

 

Selling, general and other expenses

 

240,936

 

 

11,854

 

 

 

26,670

 

 

 

5,937

 

 

 

 

 

 

(140

)

 

 

285,257

 

Interest expense

 

 

 

 

 

 

697

 

 

 

 

 

 

8,391

 

 

 

 

 

 

9,088

 

Depreciation and amortization

 

23,555

 

 

362

 

 

 

21,596

 

 

 

424

 

 

 

 

 

 

 

 

 

45,937

 

Total non-compensation expenses

 

336,657

 

 

24,011

 

 

 

48,963

 

 

 

6,361

 

 

 

8,391

 

 

 

(140

)

 

 

424,243

 

Total expenses

 

1,060,933

 

 

43,947

 

 

 

183,957

 

 

 

12,510

 

 

 

8,391

 

 

 

(140

)

 

 

1,309,598

 

Income (loss) before income taxes and loss related to associated companies

 

420,885

 

 

16,009

 

 

 

5,578

 

 

 

(11,764

)

 

 

(8,391

)

 

 

 

 

 

422,317

 

Loss related to associated companies

 

 

 

 

 

 

(29,985

)

 

 

 

 

 

 

 

 

 

 

 

(29,985

)

Income (loss) before income taxes

$

420,885

 

$

16,009

 

 

$

(24,407

)

 

$

(11,764

)

 

$

(8,391

)

 

$

 

 

 

392,332

 

Income tax provision

 

 

 

 

 

 

 

 

 

 

 

 

 

64,357

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

$

327,975

 

A summary of results for the three months ended February 28, 2021 is as follows (in thousands):

 

Investment

Banking and

Capital

Markets (1)

 

Asset Management (1)

 

Merchant Banking (1)

 

Corporate

 

Parent Company Interest

 

Consolidation Adjustments (1)

 

Total

Net revenues

$

1,987,496

 

 

$

229,202

 

 

$

267,004

 

 

$

590

 

 

$

 

 

$

2,650

 

 

$

2,486,942

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of sales

 

 

 

 

 

 

 

95,559

 

 

 

 

 

 

 

 

 

 

 

 

95,559

 

Compensation and benefits

 

1,109,695

 

 

22,785

 

 

24,529

 

 

 

15,534

 

 

 

 

 

 

 

 

 

1,172,543

 

Non-compensation expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

Floor brokerage and clearing fees

 

66,574

 

 

 

9,842

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

76,416

 

Selling, general and other expenses

 

228,733

 

 

 

12,164

 

 

 

26,520

 

 

 

4,669

 

 

 

 

 

 

(149

)

 

 

271,937

 

Interest expense

 

5,553

 

 

 

 

 

 

912

 

 

 

 

 

 

13,902

 

 

 

 

 

 

20,367

 

Depreciation and amortization

 

20,710

 

 

 

479

 

 

 

16,714

 

 

 

864

 

 

 

 

 

 

 

 

 

38,767

 

Total non-compensation expenses

 

321,570

 

 

 

22,485

 

 

 

44,146

 

 

 

5,533

 

 

 

13,902

 

 

 

(149

)

 

 

407,487

 

Total expenses

 

1,431,265

 

 

 

45,270

 

 

 

164,234

 

 

 

21,067

 

 

 

13,902

 

 

 

(149

)

 

 

1,675,589

 

Income (loss) before income taxes and loss related to associated companies

 

556,231

 

 

 

183,932

 

 

 

102,770

 

 

 

(20,477

)

 

 

(13,902

)

 

 

2,799

 

 

 

811,353

 

Loss related to associated companies

 

 

 

 

 

 

 

(10,568

)

 

 

 

 

 

 

 

 

 

 

 

(10,568

)

Income (loss) before income taxes

$

556,231

 

 

$

183,932

 

 

$

92,202

 

 

$

(20,477

)

 

$

(13,902

)

 

$

2,799

 

 

 

800,785

 

Income tax provision

 

 

 

 

 

 

 

 

 

 

 

 

 

218,236

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

$

582,549

 

(1) In the first quarter of 2022, we transferred certain Merchant Banking net assets to our Investment Banking and Capital Markets and Asset Management segments. Prior year amounts have been reclassified to conform to current segment disclosure.

Selected Financial and Statistical Information

(Amounts in Thousands, Except Other Data) (Unaudited)

 

Quarter Ended

 

February 28,

2022

 

November 30,

2021 (1)

 

February 28,

2021 (1)

Investment Banking, Capital Markets and Asset Management Net Revenues:

 

 

 

 

 

 

 

 

 

 

 

Advisory

$

543,769

 

 

$

587,726

 

 

$

311,439

 

 

 

 

 

 

 

Equity underwriting

 

156,100

 

 

 

370,636

 

 

 

494,806

 

Debt underwriting

 

245,179

 

 

 

222,655

 

 

 

197,367

 

Total underwriting

 

401,279

 

 

 

593,291

 

 

 

692,173

 

 

 

 

 

 

 

Other investment banking (2)

 

58,134

 

 

 

66,631

 

 

 

83,022

 

 

 

 

 

 

 

Total investment banking

 

1,003,182

 

 

 

1,247,648

 

 

 

1,086,634

 

 

 

 

 

 

 

Equities

 

277,047

 

 

 

291,032

 

 

 

531,016

 

Fixed income

 

202,800

 

 

 

132,771

 

 

 

363,359

 

Total capital markets

 

479,847

 

 

 

423,803

 

 

 

894,375

 

 

 

 

 

 

 

Other (2)

 

(1,211

)

 

 

(23,366

)

 

 

6,487

 

 

 

 

 

 

 

Total Investment Banking and Capital Markets Net Revenues (3)

 

1,481,818

 

 

 

1,648,085

 

 

 

1,987,496

 

 

 

 

 

 

 

Asset management fees and revenues (4)

 

44,502

 

 

 

13,065

 

 

 

66,309

 

Investment return (5)

 

29,530

 

 

 

41,658

 

 

 

173,292

 

Allocated net interest (5)

 

(14,076

)

 

 

(11,914

)

 

 

(10,399

)

Total Asset Management Net Revenues

 

59,956

 

 

 

42,809

 

 

 

229,202

 

 

 

 

 

 

 

Total Investment Banking, Capital Markets and Asset Management Net Revenues

$

1,541,774

 

 

$

1,690,894

 

 

$

2,216,698

 

 

 

 

 

 

 

Investment Banking, Capital Markets and Asset Management Non-compensation Expenses:

 

 

 

 

 

 

 

 

 

 

 

Floor brokerage and clearing fees

$

83,961

 

 

$

79,652

 

 

$

76,416

 

Underwriting costs

 

8,128

 

 

 

26,931

 

 

 

36,136

 

Technology and communications

 

104,555

 

 

 

101,544

 

 

 

91,939

 

Occupancy and equipment rental

 

25,250

 

 

 

25,198

 

 

 

23,783

 

Business development

 

24,376

 

 

 

42,386

 

 

 

17,991

 

Professional services

 

51,118

 

 

 

54,986

 

 

 

38,636

 

Depreciation and amortization

 

23,917

 

 

 

23,149

 

 

 

21,189

 

Other

 

39,363

 

 

 

80,519

 

 

 

37,965

 

 

 

 

 

 

 

Total Investment Banking, Capital Markets and Asset Management Non-compensation Expenses

$

360,668

 

 

$

434,365

 

 

$

344,055

 

 

 

 

 

 

 

Investment Banking, Capital Markets and Asset Management Compensation and Benefits Expenses:

 

 

 

 

 

Compensation and benefits

$

744,212

 

 

$

711,359

 

 

$

1,132,480

 

Compensation and benefits expenses as a percentage of net revenues

 

48.3

%

 

 

42.1

%

 

 

51.1

%

 

(Amounts in Thousands, Except Other Data) (Unaudited)

 

 

 

 

 

 

 

Quarter Ended

 

February 28, 2022

 

November 30, 2021

 

February 28, 2021

Other Data:

 

 

 

 

 

Number of trading days

 

61

 

 

 

63

 

 

 

60

 

Number of trading loss days (6)

 

8

 

 

11

 

 

9

Average VaR (in millions) (7)

$

12.12

 

 

$

10.14

 

 

$

16.02

 

(1)

 

In the first quarter of 2022, we transferred certain Merchant Banking net assets to our Investment Banking and Capital Markets and Asset Management segments. Previously reported results are presented on a comparable basis.

(2)

 

In the first quarter of 2022, we also made a change to present our share of the net earnings of Berkadia Commercial Mortgage Holding LLC within Investment banking net revenues, which was previously presented within our Other business category. Previously reported results are presented on a comparable basis.

(3)

 

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.

(4)

 

Includes 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.

(5)

 

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 make clearer actual Investment return. We believe that aggregating Investment return and Allocated net interest would obscure the Investment return by including an amount that is unique to our credit spreads, debt maturity profile, capital structure, liquidity risks and allocation methods.

(6)

 

Number of trading loss days is calculated based on trading activities in our Investment Banking and Capital Markets and Asset Management business segments.

(7)

 

VaR estimates the potential loss in value of trading positions in our Investment Banking and Capital Markets and Asset Management business segments 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, 2021.

Financial Data and Metrics

(Amounts in Millions, Except Other Data) (Unaudited)

 

 

Quarter Ended

 

February 28, 2022

 

November 30, 2021

 

February 28, 2021

Financial position (1):

 

 

 

 

 

Total assets

$

60,036

 

 

$

60,404

 

 

$

56,869

 

Total assets less goodwill and intangible assets for the period

$

58,142

 

 

$

58,506

 

 

$

54,955

 

Cash and cash equivalents

$

8,501

 

 

$

10,755

 

 

$

8,649

 

Financial instruments owned

$

21,633

 

 

$

19,829

 

 

$

19,097

 

Level 3 financial instruments owned (2)

$

640

 

 

$

579

 

 

$

697

 

Goodwill and intangible assets

$

1,895

 

 

$

1,898

 

 

$

1,914

 

Total equity

$

10,549

 

 

$

10,580

 

 

$

9,778

 

Total shareholders’ equity

$

10,490

 

 

$

10,554

 

 

$

9,746

 

Tangible equity (3)

$

8,596

 

 

$

8,656

 

 

$

7,832

 

 

 

 

 

 

 

Other data and financial ratios:

 

 

 

 

 

Leverage ratio (1) (4)

 

5.7

 

 

 

5.7

 

 

 

5.8

 

Tangible gross leverage ratio (1) (5)

 

6.8

 

 

 

6.8

 

 

 

7.0

 

 

 

 

 

 

 

Number of employees, at period end

 

5,625

 

 

5,556

 

 

5,009

(1)

 

Amounts pertaining to February 28, 2022 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 three months ended February 28, 2022.

(2)

 

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.

(3)

 

Tangible equity (a non-GAAP financial measure) represents total Jefferies shareholders’ equity less goodwill and identifiable intangible assets. We believe that tangible equity is meaningful for valuation purposes, as financial companies are often measured as a multiple of tangible equity, making these ratios meaningful for investors.

(4)

 

Leverage ratio equals total assets divided by total equity.

(5)

 

Tangible gross leverage ratio (a non-GAAP financial measure) equals total assets less goodwill and identifiable intangible assets divided by tangible equity. The tangible gross leverage ratio is used by rating agencies in assessing our leverage ratio.

Non-GAAP Reconciliations

The following tables reconcile our non-GAAP measures to their respective U.S. GAAP measures. Management believes such non-GAAP 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

The table below reconciles our Net income attributable to common shareholders to adjusted net income and our Shareholders’ equity to adjusted tangible shareholders’ equity (in thousands):

 

 

 

Three Months Ended

February 28, 2022

 

Three Months Ended

February 28, 2021

 

 

 

 

 

 

 

Net income attributable to common shareholders (GAAP)

 

$

327,447

 

 

$

582,435

 

 

Intangible amortization and impairment expense, net of tax

 

 

2,949

 

 

 

2,604

 

 

Adjusted net income (non-GAAP)

 

$

330,396

 

 

$

585,039

 

 

Annualized adjusted net income (non-GAAP)

 

$

1,321,584

 

 

$

2,340,156

 

 

 

 

 

 

 

 

 

 

November 30,

2021

 

November 30,

2020

 

 

 

 

 

 

 

Shareholders’ equity (GAAP)

 

$

10,553,755

 

 

$

9,403,893

 

 

Less: Intangible assets, net and goodwill

 

 

(1,897,500

)

 

 

(1,913,467

)

 

Less: Deferred tax asset

 

 

(327,547

)

 

 

(393,687

)

 

Less: Weighted average quarter-to-date impact of cash dividends and share repurchases

 

 

(154,005

)

 

 

(68,714

)

 

Adjusted tangible shareholders’ equity (non-GAAP)

 

$

8,174,703

 

 

$

7,028,025

 

 

 

 

 

 

 

 

Return on adjusted tangible equity

 

 

16.2

%

 

 

33.3

%

Jefferies Shareholders’ Equity GAAP Reconciliation

The table below reconciles our shareholders’ equity to tangible shareholders’ equity (in thousands):

 

 

 

December 31, 2017

 

 

 

 

 

Shareholders’ equity (GAAP)

 

$

10,105,957

 

 

Intangible assets, net and goodwill

 

 

(2,463,180

)

 

Tangible shareholders’ equity (non-GAAP)

 

$

7,642,777

 

Jefferies Book Value and Shares Outstanding GAAP Reconciliation

The table below reconciles our book value (shareholders’ equity) to adjusted tangible book value and our common shares outstanding to fully diluted shares outstanding (in thousands, except per share amounts):

 

 

 

February 28, 2022

 

 

 

 

 

Book value (GAAP)

 

$

10,490,300

 

 

Redeemable convertible preferred shares convertible to common shares (1)

 

 

125,000

 

 

Stock options (2)

 

 

120,141

 

 

Intangible assets, net and goodwill

 

 

(1,894,721

)

 

Adjusted tangible book value (non-GAAP)

 

$

8,840,720

 

 

 

 

 

 

Common shares outstanding (GAAP)

 

 

240,169

 

 

Restricted stock units (“RSUs”)

 

 

16,466

 

 

Redeemable convertible preferred shares converted to common shares (1)

 

 

4,441

 

 

Stock options (2)

 

 

5,063

 

 

Other

 

 

1,088

 

 

Fully diluted shares outstanding (non-GAAP) (3)

 

 

267,227

 

 

 

 

 

 

Book value per share outstanding

 

$

43.68

 

 

Tangible book value per fully diluted share outstanding

 

$

33.08

 

 

 

 

 

(1)

Redeemable convertible preferred shares added to book value and fully diluted shares assume that the redeemable convertible preferred shares are converted to common shares.

(2)

Stock options added to book value are equal to the total number of stock options outstanding as of February 28, 2022 of 5,063,000 multiplied by the weighted average exercise price of $23.73 on February 28, 2022. Stock options added to fully diluted shares are equal to the total stock options outstanding on February 28, 2022.

(3)

Fully diluted shares outstanding include vested and unvested RSUs as well as the target number of RSUs issuable under the senior executive compensation plans. Fully diluted shares outstanding also include all stock options and the additional common shares if our redeemable convertible preferred shares were converted to common shares.

 

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