TMCnet News
Jefferies Financial Group Inc. Announces Second Quarter 2018 ResultsJefferies Financial Group Inc. (NYSE: JEF), formerly known as Leucadia National Corporation, today announced its financial results for the three and six month periods ended June 30, 2018. Net income attributable to Jefferies Financial Group common shareholders was $726 million, or $2.03 per diluted share, for the second quarter, and $850 million, or $2.33 per diluted share, for the first half of 2018. Second quarter pre-tax income, from continuing and discontinued operations, was $1.02 billion, which includes the pre-tax gain of $873 million recorded as a result of the June closing of the previously reported sale of 48% of National Beef, partially offset by a $158 million unrealized mark to market write-down on our investment in HRG Group during the second quarter. Rich Handler and Brian Friedman, CEO and President, respectively, of Jefferies Financial Group, said: "The second quarter witnessed several significant milestones for Jefferies Financial Group: we sold 48% of National Beef at an attractive valuation and triggered its deconsolidation; we agreed to sell our 75% interest in Garcadia, also at an attractive price; we changed our corporate name to Jefferies Financial Group Inc.; and we repurchased a total of over 24 million of our outstanding shares (7%) at an average price of $24.17 per share, or a total of $582 million returned to shareholders in the second quarter. "Our Board has authorized today the further repurchase of up to an additional 25 million shares, bringing our total authorization to 25.9 million shares. We may buy shares from time to time in the open market or otherwise. In addition, our Board of Directors has declared a quarterly cash dividend equal to $0.125 per Jefferies common share, an increase of 25% from recent levels, payable on September 28, 2018 to record holders of Jefferies common shares on September 17, 2018. Business Update As previously reported, Jefferies Group LLC's second quarter results were strong, with total net revenues of $824 million. Net income of $99 million represented an annualized return on tangible equity of 10.8%1. Results for the quarter were led by Investment Banking, with net revenues of $507 million, up 42% compared to last year's second quarter. Investment Banking results reflect solid execution across the board in both merger and acquisition advisory and financing, and are the result of our continuing efforts to broaden and deepen our client coverage and product capabilities. Equities revenues for the quarter were $175 million, consistent with last year's second quarter. We believe we are well positioned for continued market share gains. Fixed income revenues were $121 million, light in comparison to last year; however, volumes picked up in April and May. Berkadia's debt origination and investment sales divisions continue to build momentum. Berkadia originated $6 billion in new financing for clients in the second quarter, up 25% from its previous second quarter high of $4.8 billion in 2017. Investment sales volume was $2.3 billion during the quarter, a 14% increase over the same period in 2017. Berkadia's servicing portfolio is essentially flat compared to last year, weathering the ongoing wave of CMBS maturities. We recorded income from associated companies related to Berkadia of $25 million for the three months ended June 30, 2018. During the second quarter, we also took steps to expand our asset management efforts, including the formation of a strategic relationship with Weiss Multi-Strategy Advisors LLC. We invested $250 million in Weiss' strategy and will receive a profit share in the first year, and a revenue share thereafter. We are working with Weiss to assist in raising capital for new and developing strategies. In addition, we finalized an agreement with Schonfeld Strategic Advisors LLC to merge the business of Folger Hill Asset Management with Schonfeld's fundamental equities business, under the Schonfeld brand. In connection with the merger, we have agreed to make an investment in the combined strategy and we'll own a revenue share in the management company. As previously reported, we "right-sized" our investment in National Beef with the closing of the sale of 48% of National Beef to Marfrig. We received about $1.1 billion in cash, including both sale proceeds and pre-closing distributions, and recorded a pre-tax gain of $873 million. We continue to share in the profits and cash generated by National Beef, based on the 31% we retain. Throughout the second quarter, demand for beef and cattle supply remained strong, supporting favorable margin conditions. Vitesse Energy Finance acquired interests in additional non-operated Bakken flowing wells and development acreage in April 2018, more than doubling total production to 7800 boe/day as of June 30, 2018 and nearly doubling its Bakken development acreage to more than 40,000 net acres. Our results for the quarter were partly offset by a $158 million mark-to-market reduction in the value of our HRG position. On July 13, 2018, HRG completed its previously announced merger with Spectrum Brands, completing HRG's transformation and converting our 23% interest in HRG to a 14% ownership of Spectrum Brands. Idaho Timber continued to enjoy a combination of higher than average selling prices, increased volume and favorable supply prices, contributing $19 million to pre-tax income for the second quarter. During the quarter, we also made progress building value in the remainder of our merchant banking portfolio, as we moved Linkem and Golden Queen further down the path to profit and cash generation. We continue to expect a third quarter closing of our sale of 100% of our interest in Garcadia. * * * * More information on the Company's results of operations for the three and six months ended June 30, 2018 will be provided upon filing of the Company's Form 10-Q with the Securities and Exchange Commission. 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 include expectations relating to the Garcadia transaction disclosed in this press release. 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). 1Return on tangible equity (a non-GAAP financial measure) equals Jefferies Group second quarter of 2018 annualized net income divided by Jefferies Group tangible equity (a non-GAAP financial measure) of $3,656 million at March 31, 2018. Tangible equity at March 31, 2018, is equal to Jefferies Group equity of $5,555 million less Intangible assets, net and goodwill of $1,898 million.
A summary of results for the three months ended June 30, 2018 and 2017 is as follows (in thousands):
A summary of results for the six months ended June 30, 2018 and 2017 is as follows (in thousands):
View source version on businesswire.com: https://www.businesswire.com/news/home/20180726005950/en/ |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
