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Jefferies Announces Fourth Quarter 2022 Financial Results

Jefferies Financial Group Inc. (NYSE: JEF):

Q4 Financial Highlights

  • Net earnings attributable to common shareholders of $140 million, or $0.57 per diluted share
  • Annualized return on adjusted tangible equity of 7.2%1
  • Total net revenues of $1.44 billion
    • Investment Banking net revenues of $568 million
    • Capital Markets net revenues of $478 million
    • Asset Management net revenues (before allocated net interest2) of $402 million, inclusive of $232 million of net revenues from merchant banking activities
  • Repurchased 3.9 million shares of common stock for $121 million, or an average price of $31.24 per share
  • Our Board of Directors has increased our share buyback authorization back to a total of $250 million
  • On November 1, 2022, we completed our merger with Jefferies Group LLC. This merger eliminated Jefferies Group LLC’s requirement to file Form 10-Qs, Form 10-Ks, and other duplicative processes, and resulted in us assuming Jefferies Group's debt obligations. In connection with the merger we have transferred our legacy merchant banking investments to our Investment Banking and Capital Markets or Asset Management segment and have reorganized the presentation of our segments and Net revenues to align with the way we are now managing our business. Additionally, corporate activities are now fully allocated to these segments. Prior year amounts have been revised to conform to this current presentation. Refer to Note 18 for further information.

“Jefferies' 2022 total investment banking revenues, while down 38% from an off-the-charts 2021, represented our second-best year ever and were substantially above 2019 levels. Our advisory net revenues were only 5% below last year's all-time record result, while our underwriting net revenues were down 59%, due to the IPO and leveraged finance markets being substantially closed for much of the year. Our combined equities and fixed income net revenues were down only 19% versus 2021 and up meaningfully versus 2019.

"Most significantly, for our fiscal 2022, Jefferies was the #6 largest investment banking firm in both global M&A, as well as global equity capital markets (excluding China), up from #12 and #13, respectively, only five years ago. We also moved up one spot from the prior year to #7 globally in combined M&A, ECM and leveraged finance, an improvement from #10 in 2017. It is worth noting that all the competitors ahead of us on these lists are trillion dollar plus global bank holding companies who often lead with their balance sheet, while Jefferies leads with ideas, expertise and human capital.

"Our Equities franchise continued to expand in breadth and capability, while gaining market share across the majority of equity products in 2022. We achieved a U.S. ranking of #6 and a European ranking of #7 for equity research, while we were ranked #3 best overall in Asia for combined equity research and sales. While our Fixed Income business was down for the year, our fourth quarter was up over 71% and we carried that momentum through the first month of fiscal 2023.

"Monetizing our legacy merchant banking portfolio and returning capital to shareholders remains one of our overriding priorities, and we made continued progress in 2022. We expect to take a further important step later this week with our spin-off to shareholders of Vitesse Energy ('Vitesse'). In 2022, we returned an aggregate of $1.14 billion to shareholders in the form of $280.1 million in dividends and the repurchase of 25.6 million shares for a total of $859.6 million, or $33.58 per share. Over the last five years, we have now returned $5.0 billion in total capital to shareholders, representing two-thirds of total tangible book value3 at January 1, 2018 and including 152.8 million shares repurchased at an average of $23.57 per share. Further, our Vitesse spin-off delivers to our shareholders an additional estimated more than $500 million of our shareholders' equity. Pro forma for the Vitesse spin-off, we will have returned over $5.5 billion in total capital to shareholders over the last five years, representing over 72% of tangible book value3 at January 1, 2018.

"In sum, we achieved a respectable return on adjusted tangible equity of 10.3%1 in a very difficult environment, enhanced our market position in our core businesses and simplified our corporate structure. As we move forward in 2023, we have never been more optimistic about our human capital, product capabilities, industry expertise and geographic breadth, which we intend to continue to aggressively deliver to our clients going forward. Our goal is to continue to gain market share, further strengthening our 'never better' competitive position, and continue our quest to be the best full service global investment banking firm."

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 2022, as well as our strategy and outlook.

Quarterly Cash Dividend

The Jefferies Board of Directors declared a quarterly cash dividend equal to $0.30 per Jefferies common share, payable on February 24, 2023 to record holders of Jefferies common shares on February 13, 2023.

Financial Summary

(Dollars in thousands, except per share amounts)

Three Months Ended

November 30,

 

 

 

Twelve Months Ended

November 30,

 

 

 

2022

 

202118

 

% Change

 

2022

 

202118

 

% Change

Net revenues:

 

 

 

 

 

 

 

 

 

Investment Banking and Capital Markets

$

1,046,434

 

 

$

1,615,752

 

(35

)%

 

$

4,726,150

 

 

$

6,917,774

 

(32

)%

Asset Management

 

395,228

 

 

 

151,177

 

161

%

 

 

1,257,693

 

 

 

1,092,624

 

15

%

Other

 

(3,580

)

 

 

(8,438

)

58

%

 

 

(5,005

)

 

 

3,428

 

N/M

 

Net revenues

 

1,438,082

 

 

 

1,758,491

 

(18

)%

 

 

5,978,838

 

 

 

8,013,826

 

(25

)%

Net earnings before income taxes

 

194,840

 

 

 

425,565

 

(54

)%

 

 

1,055,562

 

 

 

2,254,105

 

(53

)%

Income tax expense

 

53,903

 

 

 

91,973

 

(41

)%

 

 

273,852

 

 

 

576,729

 

(53

)%

Net earnings

 

140,937

 

 

 

333,592

 

(58

)%

 

 

781,710

 

 

 

1,677,376

 

(53

)%

Net earnings (losses) attributable to noncontrolling interests

 

(1,280

)

 

 

6,586

 

N/M

 

 

 

(2,397

)

 

 

3,850

 

N/M

 

Net earnings (loss) attributable to redeemable noncontrolling interests

 

(101

)

 

 

245

 

N/M

 

 

 

(1,342

)

 

 

(826

)

62

%

Preferred stock dividends

 

2,070

 

 

 

1,848

 

12

%

 

 

8,281

 

 

 

6,949

 

19

%

Net earnings attributable to Jefferies Financial Group Inc.

$

140,248

 

 

$

324,913

 

(57

)%

 

$

777,168

 

 

$

1,667,403

 

(53

)%

Basic earnings per common share

$

0.58

 

 

$

1.23

 

(53

)%

 

$

3.13

 

 

$

6.29

 

(50

)%

Weighted average shares

 

239,312

 

 

 

261,637

 

 

 

 

247,378

 

 

 

263,595

 

 

Diluted earnings per common share

$

0.57

 

 

$

1.20

 

(53

)%

 

$

3.06

 

 

$

6.13

 

(50

)%

Weighted average diluted shares

 

248,338

 

 

 

270,743

 

 

 

 

255,571

 

 

 

271,501

 

 

Annualized return on adjusted tangible equity1

 

7.2

%

 

 

16.5

%

 

 

 

10.3

%

 

 

24.5

%

 

Adjusted annualized return on adjusted tangible equity4

 

7.2

%

 

 

16.5

%

 

 

 

11.3

%

 

 

24.5

%

 

 

N/M — Not Meaningful

Highlights

 

Three Months Ended November 30, 2022

 

Twelve Months Ended November 30, 2022

  • Net earnings attributable to common shareholders of $140 million, or $0.57 per diluted share.
  • Repurchased 3.9 million shares of common stock for $121.0 million, or an average price of $31.24 per share.
  • We had 226.1 million shares outstanding and 254.6 million shares outstanding on a fully diluted basis5 at November 30, 2022. Our book value per share was $45.25 and tangible book value per fully diluted share6 was $33.78 at November 30, 2022.
  • Our Board of Directors has increased our share buyback authorization back to a total of $250 million.
  • Effective tax rate of 27.7%

 

  • Net earnings attributable to common shareholders of $777 million, or $3.06 per diluted share; adjusted net earnings attributable to common shareholders8 of $857 million, or $3.37 per diluted share, after removing $80 million of expense related to a regulatory settlement in the third quarter.
  • Repurchased 25.6 million shares of common stock for $859.6 million, or an average price of $33.58 per share.
  • Effective tax rate of 25.9%, reflecting non-deductible $80 million regulatory settlement during the year; adjusted effective tax rate17 of 24.1% without the cost of this settlement.
 

Three Months Ended November 30, 2022

 

Twelve Months Ended November 30, 2022

Investment Banking and Capital Markets

 

Investment Banking and Capital Markets

  • Investment Banking net revenues were $568 million, as our mergers and acquisitions net revenues remained strong. Our debt and equity underwriting net revenues were lower than the same quarter last year, consistent with a reduction in industry-wide deal activity.
  • Capital Markets net revenues of $478 million were slightly higher as compared to the prior year quarter. Equities net revenues benefited from elevated client trading volumes and market volatility. Fixed Income net revenues reflect robust emerging market trading results partially offset by reduced market activity for various fixed income products.

 

  • Investment Banking net revenues of $2.90 billion were driven by near-record advisory net revenues, offset by lower net revenues in debt and equity underwriting, consistent with significant reduced industry activity.
  • Capital Markets net revenues of $1.83 billion were lower as compared to the prior year. Equities net revenues were impacted by significantly reduced trading volumes related to a slowdown in new-issue offerings offset by strong client activity on market volatility and global instability. Fixed Income results were also impacted by significantly reduced trading volumes related to a decline in new-issue activity, lower overall trading volumes, mark-to-market losses on certain mortgage inventory positions and a slowdown in securitization activity in the face of inflation concerns and interest rate uncertainty.
 

Three Months Ended November 30, 2022

 Twelve Months Ended November 30, 2022

Asset Management

 

Asset Management

  • Asset Management net revenues reflect a challenging trading environment resulting in modest investment losses offset by the sale of our Oak Hill investment as well as merchant banking revenues, which include revenues from the sale of a multi-family project completed at HomeFed.

 

  • Asset Management net revenues reflect revenues from sales of certain assets, partially offset by lower investment returns as compared to the prior year.

* * * *

Amounts herein pertaining to November 30, 2022 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 year ended November 30, 2022 will be provided upon filing our Annual Report on Form 10-K with the SEC, which we expect to file on or about January 27, 2023.

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).

Selected Financial Information

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

Quarter Ended

 

November 30, 2022

 

August 31, 202218

 

November 30, 202118

Net revenues by source:

 

 

 

 

 

Advisory

$

381,412

 

 

$

481,419

 

 

$

587,476

 

Equity underwriting

 

109,439

 

 

 

150,972

 

 

 

370,636

 

Debt underwriting

 

61,731

 

 

 

76,943

 

 

 

222,655

 

Total underwriting

 

171,170

 

 

 

227,915

 

 

 

593,291

 

Other investment banking

 

15,892

 

 

 

(49,222

)

 

 

11,181

 

Total Investment Banking

 

568,474

 

 

 

660,112

 

 

 

1,191,948

 

Equities

 

251,280

 

 

 

277,448

 

 

 

291,033

 

Fixed income

 

226,680

 

 

 

174,618

 

 

 

132,771

 

Total Capital Markets

 

477,960

 

 

 

452,066

 

 

 

423,804

 

Total Investment Banking and Capital Markets Net revenues9

 

1,046,434

 

 

 

1,112,178

 

 

 

1,615,752

 

Asset management fees and revenues10

 

13,440

 

 

 

17,069

 

 

 

13,065

 

Investment return2

 

156,613

 

 

 

(35,488

)

 

 

41,554

 

Merchant banking

 

231,805

 

 

 

430,009

 

 

 

108,472

 

Allocated net interest2

 

(6,630

)

 

 

(9,934

)

 

 

(11,914

)

Total Asset Management Net revenues

 

395,228

 

 

 

401,656

 

 

 

151,177

 

Other

 

(3,580

)

 

 

(3,990

)

 

 

(8,438

)

Total Net revenues by source

$

1,438,082

 

 

$

1,509,844

 

 

$

1,758,491

 

 

 

 

 

 

 

Non-interest expenses:

 

 

 

 

 

Compensation and benefits

$

659,121

 

 

$

559,593

 

 

$

746,185

 

Floor brokerage and clearing fees

 

85,143

 

 

 

84,685

 

 

 

79,652

 

Underwriting costs

 

9,076

 

 

 

11,672

 

 

 

26,932

 

Technology and communications

 

114,957

 

 

 

110,925

 

 

 

103,054

 

Occupancy and equipment rental

 

28,420

 

 

 

26,589

 

 

 

26,027

 

Business development

 

42,610

 

 

 

36,322

 

 

 

42,381

 

Professional services

 

71,042

 

 

 

61,428

 

 

 

58,773

 

Depreciation and amortization

 

43,471

 

 

 

43,187

 

 

 

40,536

 

Cost of sales

 

91,281

 

 

 

123,436

 

 

 

79,954

 

Other

 

98,121

 

 

 

150,157

 

 

 

129,432

 

Total Non-interest expenses

$

1,243,242

 

 

$

1,207,994

 

 

$

1,332,926

 

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

 

Twelve Months Ended November 30,

 

 

2022

 

202118

Net revenues by source:

 

 

 

 

Advisory

 

$

1,778,003

 

 

$

1,873,204

 

Equity underwriting

 

 

538,946

 

 

 

1,557,364

 

Debt underwriting

 

 

490,873

 

 

 

935,131

 

Total underwriting

 

 

1,029,819

 

 

 

2,492,495

 

Other investment banking

 

 

92,170

 

 

 

291,423

 

Total Investment Banking

 

 

2,899,992

 

 

 

4,657,122

 

Equities

 

 

1,060,582

 

 

 

1,301,530

 

Fixed income

 

 

765,576

 

 

 

959,122

 

Total Capital Markets

 

 

1,826,158

 

 

 

2,260,652

 

Total Investment Banking and Capital Markets Net revenues9

 

 

4,726,150

 

 

 

6,917,774

 

Asset management fees and revenues10

 

 

89,127

 

 

 

120,733

 

Investment return2

 

 

156,594

 

 

 

260,316

 

Merchant banking

 

 

1,053,031

 

 

 

756,482

 

Allocated net interest2

 

 

(41,059

)

 

 

(44,907

)

Total Asset Management Net revenues

 

 

1,257,693

 

 

 

1,092,624

 

Other

 

 

(5,005

)

 

 

3,428

 

Total Net revenues by source

 

$

5,978,838

 

 

$

8,013,826

 

 

 

 

 

 

Non-interest expenses:

 

 

 

 

Compensation and benefits

 

$

2,589,044

 

 

$

3,554,760

 

Floor brokerage and clearing fees

 

 

347,805

 

 

 

301,860

 

Underwriting costs

 

 

42,067

 

 

 

117,572

 

Technology and communications

 

 

444,011

 

 

 

388,134

 

Occupancy and equipment rental

 

 

108,001

 

 

 

106,254

 

Business development

 

 

150,500

 

 

 

109,772

 

Professional services

 

 

240,978

 

 

 

215,761

 

Depreciation and amortization

 

 

172,902

 

 

 

157,420

 

Cost of sales

 

 

440,837

 

 

 

470,870

 

Other

 

 

387,131

 

 

 

337,318

 

Total Non-interest expenses

 

$

4,923,276

 

 

$

5,759,721

 

Financial Data and Metrics

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

Quarter Ended

 

November 30, 2022

 

August 31, 2022

 

November 30, 2021

Other Data:

 

 

 

 

 

Number of trading days

 

63

 

 

64

 

 

63

Number of trading loss days11

 

3

 

 

9

 

 

11

Average VaR (in millions)12

$

10.62

 

$

9.60

 

$

10.14

 

 

 

 

 

 

 

 

 

Twelve Months Ended November 30,

 

 

 

2022

 

2021

Other Data:

 

 

 

 

 

Number of trading days

 

 

 

252

 

 

252

Number of trading loss days11

 

 

 

30

 

 

60

Average VaR (in millions)12

 

 

$

11.04

 

$

13.63

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

Quarter Ended

 

November 30, 2022

 

August 31, 2022

 

November 30, 2021

Financial position13:

 

 

 

 

 

Total assets19

$

51,058

 

$

51,477

 

$

56,107

Total assets less goodwill and intangible assets for the period19

 

49,182

 

 

49,603

 

 

54,209

Cash and cash equivalents

 

9,703

 

 

9,478

 

 

10,755

Financial instruments owned19

 

18,666

 

 

18,776

 

 

18,025

Level 3 financial instruments owned14, 19

 

791

 

 

790

 

 

575

Goodwill and intangible assets

 

1,876

 

 

1,874

 

 

1,898

Total equity

 

10,295

 

 

10,360

 

 

10,580

Total shareholders' equity

 

10,233

 

 

10,293

 

 

10,554

Tangible shareholders' equity7

 

8,357

 

 

8,419

 

 

8,656

Other data and financial ratios:

 

 

 

 

 

Leverage ratio13, 15, 19

 

5.0

 

 

5.0

 

 

5.3

Tangible gross leverage ratio13, 16, 19

 

5.9

 

 

5.9

 

 

6.3

Number of employees, at period end

 

5,381

 

 

5,347

 

 

5,556

Components of Denominator for Earnings Per Share

The denominators used to calculate basic and diluted earnings per share are as follows (in thousands):

 

 

Three Months Ended

November 30, 2022

 

Twelve Months Ended

November 30, 2022

Weighted average common shares outstanding

 

227,395

 

 

234,258

 

Weighted average shares of restricted stock with future service

 

(1,789

)

 

(1,330

)

Weighted average restricted stock units outstanding with no future service

 

13,706

 

 

14,450

 

Denominator for basic earnings per share

 

239,312

 

 

247,378

 

Stock options and other share based awards

 

1,617

 

 

1,518

 

Senior executive compensation plan restricted stock unit awards

 

2,968

 

 

2,234

 

Mandatorily redeemable convertible preferred shares

 

4,441

 

 

4,441

 

Denominator for diluted earnings per share

 

248,338

 

 

255,571

 

Notes

  1. Annualized return on adjusted tangible equity (a non-GAAP financial measure) is defined as annualized adjusted net earnings (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 10 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 present direct Asset Management revenues. We believe that aggregating Allocated net interest would obscure the revenue results by including an amount that is unique to our credit spreads, debt maturity profile, capital structure, liquidity risks and allocation methods. Refer to Selected Financial Information on pages 5 to 6.
  3. Tangible book value (a non-GAAP financial measure) is defined as shareholders' equity less intangible assets, net and goodwill. Refer to schedule on page 11 for reconciliation to U.S. GAAP amounts.
  4. Adjusted annualized return on adjusted tangible equity (a non-GAAP financial measure) is defined as Jefferies' annualized adjusted net earnings excluding the net earnings impact of the $80 million of expense ($80 million, net of tax) related to a regulatory settlement during the current year (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 10 for reconciliation to U.S. GAAP amounts.
  5. Shares outstanding on a fully diluted basis (a non-GAAP financial measure) is defined as common shares outstanding plus restricted stock units, stock options, conversion of redeemable convertible preferred shares and other shares. Refer to schedule on page 11 for reconciliation to U.S. GAAP amounts.
  6. Adjusted 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 11 for reconciliation to U.S. GAAP amounts.
  7. Tangible shareholders' equity (a non-GAAP financial measure), is defined as shareholders' equity less Intangible assets and goodwill. 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.
  8. Adjusted net earnings attributable to common shareholders (a non-GAAP financial measure) excludes the $80 million expense ($80 million, net of tax) related to a regulatory settlement in the third quarter. Refer to schedule on page 9 for reconciliation to U.S. GAAP amounts.
  9. 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.
  10. 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.
  11. Number of trading loss days is calculated based on trading activities in our Investment Banking and Capital Markets and Asset Management business segments.
  12. VaR estimates the potential loss in value of trading positions 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.
  13. Amounts pertaining to November 30, 2022 represent a preliminary estimate as of the date of this earnings release and may be revised in our Annual Report on Form 10-K for the year ended November 30, 2022.
  14. 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.
  15. Leverage ratio equals total assets divided by total equity.
  16. 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.
  17. Adjusted effective tax rate (a non-GAAP financial measure) excludes the $80 million expense related to a regulatory settlement in the current year. Refer to schedule on page 10 for reconciliation to U.S. GAAP amounts.
  18. We have reclassified the presentation of certain line items within our Net revenues by sources to streamline our financial statements to better align the presentation of our firm with the strategy of building our investment banking and capital markets and asset management businesses as we continue to reduce our legacy merchant banking portfolio. Historical periods have been recast to conform to these reclassification and presentation changes.
  19. We have changed the accounting for our secondary trading activity related to the purchases and sales of corporate loans. Historically, we have accounted for purchases and sales of corporate loans on trade date recognizing the total amount of purchased loans within Financial instruments owned and a corresponding liability within Payables - brokers, dealers and clearing organizations and the total amount of loans sold within Financial instruments sold, not yet purchased and a corresponding asset within Receivables - brokers, dealers and clearing organizations on the Consolidated Statements of Financial Condition for the cash to be paid or received upon settlement. We have determined that it is more preferable to recognize this trading activity on a settlement date basis and recognize firm commitments to purchase and/or sell loans on the date of trade execution due to the extended settlement period for this trading activity. There was no impact to net earnings or total equity as a result of this change in accounting policy.

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.

Adjusted Net Earnings Attributable to Common Shareholders and Adjusted Diluted Earnings Per Share GAAP Reconciliations

Reconciliation of net earnings attributable to common shareholders to adjusted net earnings attributable to common shareholders and diluted earnings per share to adjusted diluted earnings per share (in thousands, except per share amounts):

 

 

Three Months Ended

November 30, 2022

 

Twelve Months Ended

November 30, 2022

Net earnings attributable to common shareholders (GAAP)

 

$

140,248

 

$

777,168

Net earnings impact for regulatory settlement

 

 

 

 

80,000

Adjusted net earnings attributable to common shareholders (non-GAAP)

 

$

140,248

 

$

857,168

 

 

 

 

 

Diluted earnings per share (GAAP)

 

$

0.57

 

$

3.06

Diluted earnings per share impact for regulatory settlement

 

 

0.31

Adjusted diluted earnings per share (non-GAAP)

 

$

0.57

 

$

3.37

Adjusted Return on Adjusted Tangible Equity Reconciliation

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

 

 

Three Months Ended

November 30,

 

Twelve Months Ended

November 30,

 

 

2022

 

2021

 

2022

 

2021

Net earnings attributable to common shareholders (GAAP)

 

$

140,248

 

 

$

324,913

 

 

$

777,168

 

 

$

1,667,403

 

Intangible amortization and impairment expense, net of tax

 

 

1,742

 

 

 

2,773

 

 

 

8,100

 

 

 

10,649

 

Adjusted net earnings (non-GAAP)

 

$

141,990

 

 

$

327,686

 

 

$

785,268

 

 

$

1,678,052

 

Annualized adjusted net earnings (non-GAAP)

 

$

567,960

 

 

$

1,310,744

 

 

$

785,268

 

 

$

1,678,052

 

Net earnings impact for regulatory settlement

 

$

 

 

$

 

 

$

80,000

 

 

$

 

Adjusted net earnings excluding regulatory settlement (non-GAAP)

 

$

141,990

 

 

$

327,686

 

 

$

865,268

 

 

$

1,678,052

 

Annualized adjusted net earnings excluding regulatory settlement (non-GAAP)

 

$

567,960

 

 

$

1,310,744

 

 

$

865,268

 

 

$

1,678,052

 

 

 

 

 

 

 

 

 

 

 

 

August 31,

 

November 30,

 

 

2022

 

2021

 

2021

 

2020

Shareholders' equity (GAAP)

 

$

10,292,531

 

 

$

10,381,883

 

 

$

10,553,755

 

 

$

9,403,893

 

Less: Intangible assets, net and goodwill

 

 

(1,874,435

)

 

 

(1,905,163

)

 

 

(1,897,500

)

 

 

(1,913,467

)

Less: Deferred tax asset

 

 

(398,397

)

 

 

(479,016

)

 

 

(327,547

)

 

 

(393,687

)

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

 

 

(115,869

)

 

 

(62,644

)

 

 

(670,949

)

 

 

(243,003

)

Adjusted tangible shareholders' equity (non-GAAP)

 

$

7,903,830

 

 

$

7,935,060

 

 

$

7,657,759

 

 

$

6,853,736

 

Return on adjusted tangible equity (non-GAAP)

 

 

7.2

%

 

 

16.5

%

 

 

10.3

%

 

 

24.5

%

Adjusted return on adjusted tangible equity (non-GAAP)

 

 

7.2

%

 

 

16.5

%

 

 

11.3

%

 

 

24.5

%

Adjusted Effective Tax Rate GAAP Reconciliation

The table below reconciles our effective tax rate to adjusted effective tax rate:

 

 

Twelve Months Ended

November 30, 2022

Effective tax rate (GAAP)

 

25.9

%

Effective tax rate impact for regulatory settlement

 

(1.8

)%

Adjusted effective tax rate (non-GAAP)

 

24.1

%

Adjusted Tangible Book Value and Fully Diluted 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):

 

 

November 30, 2022

Book value (GAAP)

 

$

10,232,846

 

Redeemable convertible preferred shares convertible to common shares(1)

 

 

125,000

 

Stock options(2)

 

 

119,336

 

Intangible assets, net and goodwill

 

 

(1,875,576

)

Adjusted tangible book value (non-GAAP)

 

$

8,601,606

 

 

 

 

Common shares outstanding (GAAP)

 

 

226,130

 

Restricted stock units ("RSUs")

 

 

17,868

 

Redeemable convertible preferred shares converted to common shares(1)

 

 

4,441

 

Stock options(2)

 

 

5,025

 

Other

 

 

1,168

 

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

 

254,632

 

 

 

 

Book value per share outstanding

 

$

45.25

 

Tangible book value per fully diluted share outstanding (non-GAAP)

 

$

33.78

 

(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 November 30, 2022 of 5,024,532 multiplied by the weighted average exercise price of $23.75 on November 30, 2022. Stock options added to fully diluted shares are equal to the total stock options outstanding on November 30, 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 until the performance period is complete. 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.

Tangible Book Value GAAP Reconciliation

At the beginning of the press release, we disclose how much we have returned to shareholders through buybacks and dividends since the beginning of 2018 and what percentage that is of tangible book value at the beginning of 2018. The table below reconciles our shareholders' equity to tangible book value at the beginning of 2018 (in thousands):

 

 

December 31, 2017

Shareholders' equity (GAAP)

 

$

10,105,957

 

Intangible assets, net and goodwill

 

 

(2,463,180

)

Tangible book value (non-GAAP)

 

$

7,642,777

 

 

Contacts

Jonathan Freedman 212.778.8913

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