All-Time Record Annual Pre-Tax Income; 24.5% 2021 Return on Adjusted Tangible Equity¹

Quarterly Dividend Increased 20% to $0.30 Per Share

Jefferies Financial Group Inc. (NYSE: JEF)



Q4 Financial Highlights

• Net income attributable to common shareholders of $325 million, or $1.20 per diluted share; adjusted net income attributable to common shareholders² of $369 million, or $1.36 per diluted share, after removing fourth quarter expenses of $59 million related to bondholder make-whole and tender premium payments on an aggregate of $1.06 billion in debt which will reduce our future interest expense
• Quarterly Investment Banking net revenues of $1.18 billion
• Combined Capital Markets and Other net revenues of $438 million
• Asset Management net revenues (before allocated net interest³) of $55 million
• Annualized return on adjusted tangible equity of 16.5%¹; adjusted annualized return on adjusted tangible equity of 18.7%⁴
• Repurchased 2.0 million shares of common stock for $88 million, or an average price of $42.91 per share; our Board of Directors has increased our share buyback authorization by $88 million back to a total of $250 million

"What a year! Once again, Jefferies delivered record results in Investment Banking and Capital Markets and Asset Management. Our performance and momentum are the direct result of the persistent hard work and dedication of our 4,508 Jefferies Group employee-partners around the globe, decades of investment to create strong breadth and depth of capabilities across our integrated Investment Banking and Capital Markets platforms, our unique partnership culture and a supportive operating environment. Those factors have driven Jefferies to an important position of scale within our industry, and a meaningful and sustainable step change in our market position and brand. We have never wavered in prioritizing the needs and interests of our clients. We believe our momentum is excellent and, while there will be inevitable bumps in the road, our growth prospects are terrific.

"Our results and momentum derive from our incredible and increasingly global team. Jefferies' strategy is based substantially on human capital, with the right amount of supporting financial capital commensurate with market opportunity. We are committed to recruiting and growing great talent at all levels. We are thrilled that we enter fiscal 2022 with 278 Managing Directors in Investment Banking, a 24% increase from one year prior. This increase was driven equally by internal promotion of talented people we nurtured and trained, and external recruiting of experienced professionals. Our overall Jefferies Group headcount grew by 15% in 2021, enabling us to keep up with the demands from our clients and to support further growth. We have been investing for many years now in enhanced efforts to train, support, develop and grow our human capital, and we see further opportunity in this regard ahead.

"We believe Jefferies' future growth will be fueled by the continued buildout of our Investment Banking effort, enhancing our Capital Markets businesses, and further developing our Leucadia Asset Management alternative asset management platform. We will continue winding down our legacy Merchant Banking portfolio prudently and patiently, and are confident that, as we have proven in the past, there is value to be realized in excess of tangible book value.

"Our Investment Banking backlog⁵ is robust and consistent with levels from a year ago.

"In light of our performance and prospects, as well as our limited need for incremental equity capital, our Board of Directors has increased our quarterly dividend to $0.30 per share, a 140% increase from two years ago. We will continue also to return capital to shareholders via share buybacks as well as, if financial conditions and circumstances permit, in-kind distributions or special cash dividends as we continue to wind down the legacy merchant banking portfolio."

Richard Handler, CEO, and Brian Friedman, President

Please refer to the just-released Jefferies Financial Group Annual Letter from our CEO and President for broader perspective on 2021, as well as our strategy and outlook.

Financial Summary

Highlights

Quarterly Cash Dividend

The Jefferies Board of Directors declared a quarterly cash dividend equal to $0.30 per Jefferies common share, payable on February 25, 2022 to record holders of Jefferies common shares on February 14, 2022.

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Amounts herein pertaining to November 30, 2021 represent a preliminary estimate as of the date of this earnings release and may be revised upon filing our Annual Report on Form 10-K with the Securities and Exchange Commission (“SEC”). More information on our results of operations for the three and twelve months ended November 30, 2021 will be provided upon filing our Annual Report on Form 10-K with the SEC, which we expect to file on or about January 28, 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 12 for reconciliation to U.S. GAAP amounts.
2. Adjusted net income attributable to common shareholders (a non-GAAP financial measure) excludes the total expense of $59 million ($44 million net of taxes) related to $1.06 billion of debt repurchases in the fourth quarter. Refer to schedule on page 12 for reconciliation to U.S. GAAP.
3. 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 8 - 10.
4. Adjusted return on adjusted tangible equity (a non-GAAP financial measure) is defined as Jefferies' annualized adjusted net income excluding the net income impact of the $59 million of total expense ($44 million net of taxes) related to $1.06 million of debt repurchases in the fourth quarter (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 13 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. 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 14 for reconciliation to U.S. GAAP amounts.
7. 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 14 for reconciliation to U.S. GAAP amounts.

Summary

A summary of results for the three months ended November 30, 2021 is as follows (in thousands):

A summary of results for the three months ended November 30, 2020 is as follows (in thousands):

A summary of results for the twelve months ended November 30, 2021 is as follows (in thousands):

A summary of results for the twelve months ended November 30, 2020 is as follows (in thousands):

Selected Financial and Statistical Information

Financial Data and Metrics

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.

Net Income Attributable to Common Shareholders and Earnings Per Share GAAP Reconciliation

Reconciliation of Jefferies net income attributable to common shareholders to adjusted net income attributable to common shareholders (a non-GAAP measure) and diluted earnings per share to adjusted earnings per share (a non-GAAP measure) (in thousands, except per share amounts):

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):

Adjusted Return on Adjusted Tangible Equity Reconciliation

The table below reconciles our Net income attributable to common shareholders to adjusted net income excluding debt repurchase expense and our Shareholders' equity to adjusted tangible shareholders' equity (in thousands):