Jefferies Financial Group Announces Second Quarter 2021 Financial Results -- Jefferies Group LLC Delivers Record Second Quarter and Six Months Revenues and Net Income

Jefferies Dividend Increased 25% to $1.00 Per Share Annual Rate

Jefferies Financial Group Inc. (NYSE: JEF) today announced its financial results for the three and six months ended May 31, 2021. Net Income attributable to common shareholders for the second quarter was $353 million, or $1.30 per diluted share, and annualized adjusted return on tangible equity was 19.2%¹. For the six months ended May 31, 2021, Net income attributable to common shareholders was $935 million, or $3.43 per diluted share, and annualized adjusted return on tangible equity was 27.0%².

In addition, the Jefferies Board of Directors declared a quarterly cash dividend equal to $0.25 per Jefferies common share, a 25% increase on the prior dividend rate, payable on August 27, 2021 to record holders of Jefferies common shares on August 16, 2021. We expect to file our Form 10-Q on or about July 9, 2021.

Highlights for the three months ended May 31, 2021:

• Jefferies Group LLC
  • Net revenues of $1,617 million, a record for a second quarter and up 56% over the prior year second quarter's then all-time record quarterly net revenues
  • Pre-tax income of $429 million, also a record for a second quarter and up 148% over the prior year quarter, demonstrating the operating leverage inherent in our business model, and record second quarter net earnings of $318 million, up 147% over the prior year quarter
  • Annualized return on tangible equity of 26.9%³, compared with 11.6%⁴ in the prior year quarter
  • Record quarterly Investment Banking net revenues of $1,034 million, up 227% over the prior year quarter, including record quarterly Advisory net revenues of $391 million, record quarterly Debt Underwriting net revenues of $286 million and Equity Underwriting net revenues of $324 million, a record for a second quarter
  • Quarterly combined Capital Markets net revenues of $500 million, down 31.5% over the prior year quarter; Equities net revenues of $243 million, a record for a second quarter, and Fixed Income net revenues of $257 million
  • Record second quarter Asset Management revenues (before allocated net interest⁵) of $56 million, up 202% over the prior year quarter and including $15 million in management, performance and similar fees and revenues earned directly or through our strategic affiliates
  • Liquidity buffer of $8.3 billion of cash and unencumbered liquid collateral at May 31, 2021, which represented 16% of our total balance sheet

• Jefferies Financial Group
  • Net income attributable to common shareholders for the second quarter was $353 million, or $1.30 per diluted share, and annualized adjusted return on tangible equity was
    
    19.2%¹
  • Merchant Banking pre-tax income of $59 million, reflecting record quarterly results from Idaho Timber and mark-to-market increases in the value of several of our investments in public and private companies

Highlights for the six months ended May 31, 2021:

• Jefferies Group LLC
  • Record six months net revenues of $3,747 million, up 70% over the prior year comparable period's then all-time record net revenues
  • Record six months pre-tax income of $1,100 million, up 170% over the prior year period, and record six months net earnings of $812 million, up 171% over the prior year period
  • Annualized return on tangible equity of 35.8%⁶, compared with 14.1%⁷ in the prior year period
  • Record six months Investment Banking net revenues of $2,067 million, up 131% over the prior year period, including record Advisory net revenues of $702 million, record Equity Underwriting net revenues of $819 million and record Debt Underwriting net revenues of $483 million
  • Record six months combined Capital Markets net revenues of $1,395 million, up 14% over the prior year period; record Equities net revenues of $774 million and Fixed Income net revenues of $621 million
  • Record six months Asset Management revenues (before allocated net interest⁵) of $236 million, up 362% over the prior year period, including $52 million in management, performance and similar fees and revenues earned directly or through our strategic affiliates in the current year period; performance fees and similar revenues recorded in the first six months of the current year are attributable to performance realized in respect of the twelve months ended December 31, 2020
  • Liquidity buffer of $8.3 billion of cash and unencumbered liquid collateral at May 31, 2021, which represented 16% of our total balance sheet

• Jefferies Financial Group
  • For the six months ended May 31, 2021, Net income attributable to common shareholders was $935 million, or $3.43 per diluted share, and annualized adjusted return on tangible equity was 27.0%²
  • Merchant Banking pre-tax income of $167 million, reflecting record six month results from Idaho Timber and mark-to-market increases in the value of several of our investments in public and private companies
  • We repurchased 5.0 million shares for $128 million, or an average price of $25.51 per share during the first six months of 2021; since April 2018, Jefferies has repurchased 123 million shares for $2.6 billion in total, or an average price of $21.04 per share; our share buyback authorization remains at $250 million
  • At May 31, 2021, we had 247 million shares outstanding and 278 million shares were outstanding on a fully diluted basis⁸
  • Jefferies book value per share was $40.77 and tangible book value per fully diluted share⁹ was $30.29 at May 31, 2021
  • Since April 2018, Jefferies has returned to shareholders $3.6 billion, or 35% of shareholders' equity and 46% of tangible shareholders' equity¹⁰ at the beginning of this effort. Our shareholders' equity at May 31, 2021 is $10.1 billion. Even with our significant return of capital to our shareholders, Jefferies tangible shareholders' equity¹⁰ at May 31, 2021 is $8.2 billion, which is over $300 million higher than at March 31, 2018

Rich Handler, our CEO, and Brian Friedman, our President, said:

"We would like to thank our colleagues and clients for Jefferies' spectacular results thus far in 2021. Our performance reflects the continued growth and strength of our global full-service business model and our increasing market share – particularly in Investment Banking, where net revenues for the first half of the year were more than $2 billion and our backlog¹¹ for the third quarter is at a record level. Additionally, our Equities, Fixed Income and Asset Management businesses all are performing well, even as the environment becomes more normalized relative to the uniquely exceptional first quarter.

"We intend to continue our relentless focus on serving our clients, while strategically investing in our global platform and over 4,000 employee-partners. We will strive to remain nimble, non-bureaucratic, entrepreneurial and mindful of risk, as well as continue to prioritize and value our people and culture. We are strategically hiring at all levels and we see this as a key driver of continuing growth. This is evident particularly in Investment Banking, as our capabilities, reach and brand are proving extremely scalable.

"As of our second quarter ending May 31, 2020, Jefferies Group had last twelve months ("LTM") net revenues, LTM earnings before income taxes and LTM net earnings of $3,730 million, $515 million and $388 million, respectively. For our current LTM ending May 31, 2021, our comparable numbers are $6,739 million, $1,870 million and $1,387 million, respectively. These significant increases of 81%, 263% and 257%, respectively, show the remarkable progress that we have achieved over the past year, as we rose to the unique challenges that were presented due to COVID-19 and emerged as an even stronger, more client focused and more diversified firm.

"We are humbled by the loyalty, tenacity, dedication and spirit of our employee-partners. We look forward to seeing more and more of them fully vaccinated, safe and heading back to our offices. We also plan on taking advantage of our newfound ability to offer flexibility to our team in a hybrid environment as we continue to build Jefferies together to best serve our clients."

* * * *

Amounts herein pertaining to May 31, 2021 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, 2021 will be provided upon filing our Quarterly Report on Form 10-Q with the SEC.

This press release contains "forward-looking statements" within the meaning of the safe harbor provisions of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements 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," 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 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.

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).

A summary of results for the three months ended May 31, 2021 is as follows (in thousands):

A summary of results for the three months ended May 31, 2020 is as follows (in thousands):

A summary of results for the six months ended May 31, 2021 is as follows (in thousands):

A summary of results for the six months ended May 31, 2020 is as follows (in thousands):

The following financial tables provide information for the results of Jefferies Group LLC and should be read in conjunction with Jefferies Group LLC's Annual Report on Form 10-K for the year ended November 30, 2020. Amounts herein pertaining to May 31, 2021 represent a preliminary estimate as of the date of this earnings release and may be revised in Jefferies Group LLC's Quarterly Report on Form 10-Q for the quarter ended May 31, 2021.

Jefferies Financial Group Inc.

Non-GAAP Reconciliation

The following tables reconcile Jefferies Financial Group 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.

Jefferies Financial Group Adjusted Return on Tangible Equity Reconciliation

The table below reconciles our Net income attributable to Jefferies Financial Group to adjusted net income and our Shareholders' equity to adjusted tangible shareholders' equity (in thousands):

Jefferies Financial Group 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):

Jefferies Financial Group Shareholders' Equity GAAP Reconciliation

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

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