Jefferies(JEF) - 2024 Q4 - Annual Results

Financial Highlights Jefferies reported strong financial performance in Q4 and full-year 2024, marked by significant revenue and earnings growth and improved profitability metrics Q4 & Full-Year 2024 Performance Jefferies reported significant year-over-year growth in its fourth quarter and full-year 2024 results, with net revenues and earnings surging across both periods Key Financial Metrics (Q4 & Full-Year 2024 vs 2023) | Metric | Q4 2024 | Q4 2023 | YoY Change | FY 2024 | FY 2023 | YoY Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Total Net Revenues ($) | $1.96B | $1.20B | +63% | $7.03B | $4.70B | +50% | | Net Earnings to Common Shareholders ($) | $205.7M | $65.6M | +214% | $669.3M | $263.1M | +154% | | Diluted EPS from Continuing Operations ($) | $0.91 | $0.29 | +214% | $2.96 | $1.10 | +169% | | Return on Adjusted Tangible Shareholders' Equity (%) | 12.7% | 4.1% | +8.6pp | 10.8% | 3.9% | +6.9pp | Dividend Announcement The Board of Directors announced a 14.3% increase in the quarterly cash dividend, raising it to $0.40 per common share - The quarterly cash dividend was increased by 14.3% to $0.40 per common share, payable on February 27, 2025[2] Management Commentary Management attributes strong 2024 performance to market share gains, a favorable market, and improved expense ratios, positioning the firm for continued growth Overall Performance and Strategy Management attributes the strong 2024 performance to market share gains and a more favorable market environment, focusing on core mission and improved expense ratios - Management highlights that Q4 2024 net revenues, pre-tax earnings, and diluted EPS from continuing operations were up 63%, 249%, and 214% YoY, respectively[3] - The non-compensation expense ratio improved to 34% in 2024 from 39% in 2023, as revenue growth outpaced expense growth[5] - The firm begins 2025 in its best-ever position, with a strong team driving momentum and an enhanced market position across its offerings[10] Business Segment Performance Review All business segments demonstrated strong year-over-year growth in 2024, with Investment Banking, Capital Markets, and Asset Management all showing significant revenue increases - Investment Banking: 2024 net revenues grew 52% YoY to $3.44 billion, the second-highest on record, driven by market share gains. Q4 Advisory revenues hit a record high[3][6] - Capital Markets: 2024 net revenues increased 24% YoY to $2.76 billion. Equities revenues were up 40%, and Fixed Income revenues grew 7%, with particular strength in distressed trading and securitization[7][8] - Asset Management: 2024 fee and investment return revenues rose 27% YoY to $316 million, reflecting strong performance across multiple strategies. Other investments net revenues were $550 million, largely due to the consolidation of Stratos and Tessellis[9] Detailed Financial Results The detailed financial results for 2024 highlight substantial revenue growth across all segments and improved expense management, leading to increased net earnings Financial Summary by Source For the full year 2024, Total Investment Banking and Capital Markets net revenues significantly increased, alongside substantial growth in Asset Management, with improved compensation and non-compensation ratios Net Revenues by Source (Year Ended, $ in thousands) | Revenue Source | 2024 ($ in thousands) | 2023 ($ in thousands) | | :--- | :--- | :--- | | Total Investment Banking | $3,444,787 | $2,272,218 | | - Advisory | $1,811,634 | $1,198,916 | | - Equity Underwriting | $799,804 | $560,243 | | - Debt Underwriting | $689,227 | $410,208 | | Total Capital Markets | $2,759,554 | $2,232,161 | | - Equities | $1,592,793 | $1,139,425 | | - Fixed Income | $1,166,761 | $1,092,736 | | Total Asset Management | $803,669 | $188,345 | | Total Net Revenues | $7,034,803 | $4,700,417 | Expense Ratios (Year Ended) | Ratio | 2024 (%) | 2023 (%) | | :--- | :--- | :--- | | Compensation Ratio | 52.0% | 53.9% | | Non-compensation Ratio | 33.7% | 38.5% | Consolidated Statement of Earnings The consolidated statement for the year ended November 30, 2024, shows total net revenues of $7.03 billion, leading to significantly increased net earnings attributable to common shareholders Consolidated Earnings Summary (Year Ended, $ in thousands) | Line Item | 2024 ($ in thousands) | 2023 ($ in thousands) | | :--- | :--- | :--- | | Net Revenues | $7,034,803 | $4,700,417 | | Total Non-interest Expenses | $6,029,257 | $4,346,148 | | Earnings from Continuing Operations Before Income Taxes | $1,005,546 | $354,269 | | Net Earnings from Continuing Operations | $712,352 | $262,388 | | Net Earnings Attributable to Common Shareholders | $669,273 | $263,072 | Financial Position & Key Metrics As of November 30, 2024, Jefferies reported increased total assets and shareholders' equity, alongside a rise in employee count Financial Position (as of Nov 30, 2024) | Metric | Nov 30, 2024 ($) | Nov 30, 2023 ($) | | :--- | :--- | :--- | | Total Assets | $64.36B | $57.91B | | Total Shareholders' Equity | $10.16B | $9.71B | | Leverage Ratio | 6.3x | 5.9x | - The number of employees at period end was 7,822, an increase from 7,564 at the end of 2023[24] Quarterly & YTD Performance Analysis This section provides a detailed analysis of quarterly and year-to-date performance across Investment Banking, Capital Markets, Asset Management, and expense categories Investment Banking and Capital Markets Analysis Investment Banking and Capital Markets revenues showed strong growth in Q4 and for the full year, driven by record advisory performance and increased trading volumes - Q4 2024: Investment Banking net revenues of $987 million were 73% higher YoY, featuring the best-ever quarter for Advisory ($597 million). Capital Markets net revenues of $652 million were also higher YoY due to stronger performance in Equities[17] - Full-Year 2024: Investment Banking net revenues of $3.44 billion were 52% higher YoY. Capital Markets net revenues of $2.76 billion were up, driven by stronger Equities performance and solid Fixed Income results[18] Asset Management Analysis Asset Management revenues were substantially higher in both Q4 and the full year, driven by strong investment returns, fee growth, and strategic consolidations - Q4 Asset Management fees, revenues, and investment return of $116 million were substantially higher than the prior year quarter[13] - Full-year 2024 Asset Management fees, revenues, and investment return of $316 million were substantially higher than the prior year, reflecting fee growth and strong performance despite challenges from Weiss Multi-Strategy and 352 Capital funds[16] Expense Analysis For the full year 2024, the compensation ratio improved, while non-compensation expenses increased due to higher trading volumes, technology investments, and subsidiary consolidations - The compensation and benefits expense as a percentage of Net revenues was 52.0% for FY2024, an improvement from 53.9% in FY2023[18] - Non-compensation expenses rose primarily due to increased brokerage fees, technology and business development expenses, and the inclusion of consolidated subsidiaries like Stratos and Tessellis[18] Shareholder Information & Non-GAAP Measures This section provides detailed earnings per share calculations and reconciliations for non-GAAP financial measures, offering insights into shareholder value and adjusted performance Earnings Per Share Details The report provides a detailed reconciliation for the calculation of earnings per share, showing diluted EPS from continuing operations for the full year 2024 Diluted EPS from Continuing Operations Calculation (FY 2024) | Component | Value (in thousands, except per share) | | :--- | :--- | | Net earnings from continuing operations attributable to common shareholders | $662,609 | | Weighted average diluted common shares | 223,650 | | Diluted EPS from continuing operations ($) | $2.96 | Non-GAAP Reconciliations Jefferies presents non-GAAP measures such as Return on Adjusted Tangible Shareholders' Equity and Adjusted Tangible Book Value per Share to provide investors with management's perspective - The return on adjusted tangible shareholders' equity from continuing operations (a non-GAAP measure) was 12.7% for Q4 2024 and 10.8% for the full year 2024[27] Adjusted Tangible Book Value per Share (Nov 30, 2024) | Metric | Value ($) | | :--- | :--- | | Book value per common share (GAAP) | $49.42 | | Adjusted tangible book value per fully diluted share (Non-GAAP) | $32.36 |