Business Wire | Mar 24, 2021 04:16PM EDT

Jefferies Financial Group Announces First Quarter 2021 Financial Results

Mar. 24, 2021

NEW YORK--(BUSINESS WIRE)--Mar. 24, 2021--Jefferies Financial Group Inc. (NYSE: JEF) today announced its financial results for the three months ended February 28, 2021. In addition, the Jefferies Board of Directors declared a quarterly cash dividend equal to $0.20 per Jefferies common share payable on May 28, 2021 to record holders of Jefferies common shares on May 17, 2021. We expect to file our Form 10-Q on or about April 8, 2021.

Highlights for the three months ended February 28, 2021:

* Jefferies Group LLC Record quarterly net revenues of $2,129 million, up 82% over the prior year first quarter's then all-time record quarterly net revenues Record pre-tax income of $671 million, up 185% over the prior year quarter and further demonstrating the operating leverage inherent in our business model Record net earnings of $494 million, up 188% over the prior year quarter Annualized return on tangible equity of 43.5%1, compared with 16.1%2 in the prior year quarter Record quarterly Investment Banking net revenues of $1,033 million, up 79% over the prior year quarter, including record Equity Underwriting net revenues of $495 million, Advisory net revenues of $311 million and Debt Underwriting net revenues of $197 million Record quarterly combined Capital Markets net revenues of $894 million, up 81% over the prior year quarter; record Equities net revenues of $531 million and Fixed Income net revenues of $363 million Record quarterly Asset Management revenues (before allocated net interest3) of $180 million, up 454% over the prior year quarter, including $37 million in management and performance fees and similar revenues earned directly or through our strategic affiliates in the current year quarter; performance fees and similar revenues recorded in the first quarter of the current year are attributable to performance realized in respect of the twelve months ended December 31, 2020 Liquidity buffer of $8.1 billion of cash and unencumbered liquid collateral at February 28, 2021, which represented 16% of our total balance sheet * Jefferies Financial Group Net income attributable to common shareholders was $582 million, or $2.13 per diluted share, and annualized adjusted return on tangible equity was 33.3%4 Merchant Banking pre-tax income of $108 million, reflecting record quarterly results from Idaho Timber and mark-to-market increases in the value of several of our investments in public companies We repurchased 5.0 million shares for $128 million, or an average price of $25.51 per share during the first quarter; over the last three years, Jefferies has repurchased 123 million shares for $2.6 billion in total, or an average price of $21.04 per share Our Board of Directors has increased our share buyback authorization by $128 million back to a total of $250 million At February 28, 2021, we had 247 million shares outstanding and 275 million shares were outstanding on a fully diluted basis5 Jefferies book value per share was $39.50 and tangible book value per fully diluted share6 was $29.20 at the end of the first quarter Over the past three years, Jefferies has returned to shareholders $3.5 billion, or 34% of shareholders' equity and 45% of tangible shareholders' equity7 at the beginning of this effort. Our shareholders' equity today is $9.7 billion. Even with our significant return of capital to our shareholders, Jefferies tangible shareholders' equity7 today is $7.8 billion, which is the same level as three years ago

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

"Jefferies Group's record results for the first quarter of 2021 reflect the continued momentum and market share gains we experienced throughout 2020, where the growth in our primary businesses can now be seen to have exceeded those of the broader industry. The investment and foundation to achieve this success was made over many years and is delivering as we had planned. Jefferies Group's annualized ROTE of 43.5%1 shows the operating leverage inherent within our core business, with a growing revenue base coupled with a prudently managed cost base. Our clients have rewarded us consistently by trusting Jefferies with an ever increasing portion of their business, as we have worked hard to become one of a handful of truly global leaders in Investment Banking and Capital Markets. Our people, culture, independence and integrated full service capabilities make us unique among our primary competitors and have helped drive our market share gains.

"Jefferies Financial Group's first quarter annualized adjusted ROTE of 33.3%4 reflects the strong results at Jefferies Group, but also solid results in our reduced Merchant Banking portfolio. As we said in our 2020 Shareholder Letter, we intend to complete the transformation of Jefferies into a pure financial services firm by smartly managing down our remaining Merchant Banking portfolio and we expect Jefferies Financial Group's consolidated ROTE to converge over time with that of Jefferies Group.

"We continue to focus relentlessly on meeting the needs of our clients across the globe, as well as investing in and growing our underlying core businesses and technologies, and supporting the health, safety and well-being of our nearly 4,000 global colleagues. Our Investment Banking backlog remains robust and diverse as our investment in this core business continues and our reach expands.

"During the quarter, our clients, employees and firm came together to proudly contribute $8.3 million to 129 amazing charities around our planet that promote diversity and inclusion, support COVID-19 relief efforts, help Texas relief and support, protect and sustain our environment and strive to help humanity in other meaningful ways.

"We are also pleased to announce that, for 2020, Jefferies energy consumption and greenhouse gas emissions from our global offices, data centers, aviation and vehicle fleet at Jefferies has achieved net zero carbon emissions. This is outlined in our most recent ESG Report, which is available on our website."

* * * *

Amounts herein pertaining to February 28, 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 months ended February 28, 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).



Return on tangible equity (a non-GAAP financial measure) equals our three months ended February 28, 2021 annualized net earnings attributable to Jefferies Group LLC divided by our tangible Jefferies Group LLC member's1 equity (a non-GAAP financial measure) of $4,543 million at November 30, 2020. Tangible Jefferies Group LLC member's equity at November 30, 2020 equals Jefferies Group LLC member's equity of $6,349 million less goodwill and identifiable intangibles assets of $1,805 million.

Return on tangible equity (a non-GAAP financial measure) equals our three months ended February 29, 2020 annualized net earnings attributable to Jefferies Group LLC divided by our tangible Jefferies Group LLC member's2 equity (a non-GAAP financial measure) of $4,311 million at November 30, 2019. Tangible Jefferies Group LLC member's equity at November 30, 2019 equals Jefferies Group LLC member's equity of $6,125 million less goodwill and identifiable intangibles assets of $1,814 million.

Allocated net interest represents the allocation of a ratable portion of Jefferies Group LLC's long-term debt interest expense to Jefferies Group LLC's Asset Management reportable segment, net of interest income on3 Jefferies Group LLC's Cash and cash equivalents and other sources of liquidity, which allocation is consistent with Jefferies Group LLC's policy of allocating such items to all its business lines. Refer to Jefferies Group LLC's summary of Net Revenues by Source on page 7.

Adjusted return on tangible equity (a non-GAAP financial measure) is defined as Jefferies Financial Group's three months ended February 28, 20214 annualized adjusted net income divided by our adjusted tangible shareholders' equity at November 30, 2020. Refer to schedule on page 10 for reconciliation to U.S. GAAP amounts.

Shares outstanding on a fully diluted basis (a non-GAAP financial measure) is defined as Jefferies Financial Group's common shares outstanding plus5 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.

Tangible book value per fully diluted share (a non-GAAP financial measure) is6 defined as adjusted tangible book value divided by shares outstanding on a fully diluted basis. Refer to schedule on page 11 for reconciliation to U.S. GAAP amounts.

Tangible shareholders' equity (a non-GAAP financial measure) is defined as7 Jefferies Financial Group shareholders' equity less Intangible assets, net and goodwill. Refer to schedule on page 11 for reconciliation to U.S. GAAP amounts.

Summary for Jefferies Financial Group Inc. and Subsidiaries

(In thousands, except per share amounts)

(Unaudited)

Three Months EndedFebruary 28, 2021

Three Months EndedFebruary 29, 2020

Net revenues

$

2,486,942

$

1,386,328

Income before income taxes and loss related to associated companies

$

811,353

$

225,649

Loss related to associated companies

(10,568

)

(67,855

)

Income before income taxes

800,785

157,794

Income tax provision

218,236

45,773

Net income

582,549

112,021

Net loss attributable to the noncontrolling interests

743

2,129

Net loss attributable to the redeemable noncontrolling interests

769

282

Preferred stock dividends

(1,626

)

(1,422

)

Net income attributable to Jefferies Financial Group Inc. common shareholders

$

582,435

$

113,010

Basic earnings per common share attributable to Jefferies Financial Group Inc. common shareholders:

Net income

$

2.17

$

0.37

Number of shares in calculation

266,386

302,406

Diluted earnings per common share attributable to Jefferies Financial Group Inc. common shareholders:

Net income

$

2.13

$

0.37

Number of shares in calculation

272,881

308,280

A summary of results for the three months ended February 28, 2021 is as follows (in thousands):

Summary for Jefferies Financial Group Inc. and Subsidiaries

(In thousands, except per share amounts)

(Unaudited)

Three Months Three Months Ended Ended February 28, February 29, 2021 2020



Net revenues $ 2,486,942 $ 1,386,328



Income before income taxes and loss related to $ 811,353 $ 225,649 associated companies

Loss related to associated companies (10,568 ) (67,855 )

Income before income taxes 800,785 157,794

Income tax provision 218,236 45,773

Net income 582,549 112,021

Net loss attributable to the noncontrolling 743 2,129 interests

Net loss attributable to the redeemable 769 282 noncontrolling interests

Preferred stock dividends (1,626 ) (1,422 )

Net income attributable to Jefferies Financial $ 582,435 $ 113,010 Group Inc. common shareholders



Basic earnings per common share attributable toJefferies Financial Group Inc. common shareholders:

Net income $ 2.17 $ 0.37



Number of shares in calculation 266,386 302,406



Diluted earnings per common share attributableto Jefferies Financial Group Inc. common shareholders:

Net income $ 2.13 $ 0.37



Number of shares in calculation 272,881 308,280

A summary of results for the three months ended February 28, 2021 is as follows (in thousands):

Investment Parent Asset Merchant Consolidation Banking and Corporate Company Total Management Banking Adjustments Capital Interest Markets

Net revenues $ 1,959,509 $ 226,734 $ 297,503 $ 590 $ - $ 2,606 $ 2,486,942



Expenses:

Compensation 1,106,212 22,785 28,012 15,534 - - 1,172,543 and benefits

Cost of 66,574 9,842 95,559 - - - 171,975 sales (1)

Interest - - 6,465 - 13,902 - 20,367 expense

Depreciationand 20,684 479 16,740 864 - - 38,767 amortization

Selling,general and 222,756 12,163 32,542 4,669 - (193 ) 271,937 otherexpenses

Total 1,416,226 45,269 179,318 21,067 13,902 (193 ) 1,675,589 expenses

Income(loss)beforeincome taxes 543,283 181,465 118,185 (20,477 ) (13,902 ) 2,799 811,353 and lossrelated toassociatedcompanies

Loss relatedto - - (10,568 ) - - - (10,568 )associatedcompanies

Income(loss) $ 543,283 $ 181,465 $ 107,617 $ (20,477 ) $ (13,902 ) $ 2,799 800,785 beforeincome taxes

Income tax 218,236 provision

Net income $ 582,549

A summary of results for the three months ended February 29, 2020 is as follows (in thousands):

Investment Parent Asset Merchant Consolidation Banking and Corporate Company Total Management Banking Adjustments Capital Interest Markets

Net revenues $ 1,148,829 $ 20,329 $ 204,559 $ 9,792 $ - $ 2,819 $ 1,386,328



Expenses:

Compensation 620,924 22,221 17,190 9,858 - - 670,193 and benefits

Cost of 52,874 6,307 72,443 - - - 131,624 sales (1)

Interest - - 8,773 - 12,781 - 21,554 expense

Depreciationand 19,116 625 18,841 888 - - 39,470 amortization

Selling,general and 205,958 12,105 73,080 6,800 - (105 ) 297,838 otherexpenses

Total 898,872 41,258 190,327 17,546 12,781 (105 ) 1,160,679 expenses

Income(loss)beforeincome taxes 249,957 (20,929 ) 14,232 (7,754 ) (12,781 ) 2,924 225,649 and lossrelated toassociatedcompanies

Loss relatedto - - (67,855 ) - - - (67,855 )associatedcompanies

Income(loss) $ 249,957 $ (20,929 ) $ (53,623 ) $ (7,754 ) $ (12,781 ) $ 2,924 157,794 beforeincome taxes

Income tax 45,773 provision

Net income $ 112,021

(1) IncludesFloorbrokerageand clearingfees.

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 February 28, 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 February 28, 2021.

Jefferies Group LLC and Subsidiaries

Consolidated Statements of Earnings

(Amounts in Thousands)

(Unaudited)



Quarter Ended

February 28, November 30, February 29, 2021 2020 2020

Revenues:

Commissions and other fees $ 236,938 $ 196,143 $ 179,535

Principal transactions 791,219 467,163 371,902

Investment banking 1,003,662 906,164 592,002

Asset management fees and revenues 37,383 5,626 11,720

Interest 219,021 191,646 294,668

Other 60,588 43,652 29,729

Total revenues 2,348,811 1,810,394 1,479,556

Interest expense 219,445 201,424 308,860

Net revenues 2,129,366 1,608,970 1,170,696



Non-interest expenses:

Compensation and benefits 1,119,894 860,243 635,230



Non-compensation expenses:

Floor brokerage and clearing fees 76,580 65,189 60,580

Technology and communications 104,341 99,417 89,184

Occupancy and equipment rental 27,990 28,229 27,503

Business development 17,981 21,650 29,957

Professional services 44,288 52,056 44,665

Underwriting costs 36,136 36,551 17,529

Other 30,986 39,828 30,670

Total non-compensation expenses 338,302 342,920 300,088

Total non-interest expenses 1,458,196 1,203,163 935,318

Earnings before income taxes 671,170 405,807 235,378

Income tax expense 177,305 98,893 64,013

Net earnings 493,865 306,914 171,365

Net loss attributable to (203 ) (200 ) (2,024 )noncontrolling interests

Net earnings attributable to $ 494,068 $ 307,114 $ 173,389 Jefferies Group LLC



Pre-tax operating margin 31.5 % 25.2 % 20.1 %

Effective tax rate 26.4 % 24.4 % 27.2 %

Jefferies Group LLC and Subsidiaries

Selected Statistical Information

(Amounts in Thousands, Except Other Data)

(Unaudited)

Quarter Ended

February 28, 2021

November 30, 2020

February 29, 2020

Net Revenues by Source:

Advisory

$

311,439

$

356,823

$

343,158

Equity underwriting

494,806

340,561

131,692

Debt underwriting

197,417

208,780

117,152

Total underwriting

692,223

549,341

248,844

Other investment banking

29,825

9,446

(14,529

)

Total investment banking

1,033,487

915,610

577,473

Equities

531,016

327,314

245,641

Fixed income

363,359

263,119

248,182

Total capital markets

894,375

590,433

493,823

Other

31,647

31,319

77,533

Total Investment Banking and Capital Markets (1) (2)

1,959,509

1,537,362

1,148,829

Asset management fees and revenues

37,383

5,626

11,720

Investment return (3) (4)

142,873

77,790

20,839

Allocated net interest (3) (5)

(10,399

)

(11,808

)

(10,692

)

Total Asset Management

169,857

71,608

21,867

Net Revenues

$

2,129,366

$

1,608,970

$

1,170,696

Other Data:

Number of trading days

60

63

61

Number of trading loss days

9

3

4

Average firmwide VaR (in millions) (6)

$

16.02

$

14.92

$

7.39

Jefferies Group LLC and Subsidiaries

Selected Statistical Information

(Amounts in Thousands, Except Other Data)

(Unaudited)



Quarter Ended

February 28, November 30, February 29, 2021 2020 2020

Net Revenues by Source:



Advisory $ 311,439 $ 356,823 $ 343,158

Equity underwriting 494,806 340,561 131,692

Debt underwriting 197,417 208,780 117,152

Total underwriting 692,223 549,341 248,844

Other investment banking 29,825 9,446 (14,529 )

Total investment banking 1,033,487 915,610 577,473



Equities 531,016 327,314 245,641

Fixed income 363,359 263,119 248,182

Total capital markets 894,375 590,433 493,823



Other 31,647 31,319 77,533



Total Investment Banking and 1,959,509 1,537,362 1,148,829 Capital Markets (1) (2)



Asset management fees and revenues 37,383 5,626 11,720

Investment return (3) (4) 142,873 77,790 20,839

Allocated net interest (3) (5) (10,399 ) (11,808 ) (10,692 )

Total Asset Management 169,857 71,608 21,867



Net Revenues $ 2,129,366 $ 1,608,970 $ 1,170,696



Other Data:

Number of trading days 60 63 61

Number of trading loss days 9 3 4



Average firmwide VaR (in millions) $ 16.02 $ 14.92 $ 7.39 (6)

(1)

Includes net interest revenues of $12.2 million, $6.9 million and $2.9 million for the quarters ended February 28, 2021, November 30, 2020 and February 29, 2020, respectively.

(2)

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.

(3)

Net revenues attributed to the Investment return in Jefferies Group LLC Asset Management have been disaggregated to separately present Investment return and Allocated net interest (see footnote 5 below). This disaggregation is intended to increase transparency and to make clearer actual Investment return. We believe that aggregating Investment return and Allocated net interest would obscure the Investment return by including an amount that is unique to Jefferies Group LLC's credit spreads, debt maturity profile, capital structure, liquidity risks and allocation methods.

(4)

Includes net interest expense of $2.3 million, $4.9 million and $6.4 million for the quarters ended February 28, 2021, November 30, 2020 and February 29, 2020, respectively.

(5)

Allocated net interest represents the allocation of Jefferies Group LLC's long-term debt interest expense to Jefferies Group LLC's Asset Management, net of interest income on Jefferies Group LLC's Cash and cash equivalents and other sources of liquidity (refer to page 8).

(6)

VaR estimates the potential loss in value of Jefferies Group LLC's 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 7 "Management's Discussion and Analysis" in Jefferies Group LLC's Annual Report on Form 10-K for the year ended November 30, 2020.

Includes net interest revenues of $12.2 million, $6.9 million and $2.9(1) million for the quarters ended February 28, 2021, November 30, 2020 and February 29, 2020, respectively.

Allocated net interest is not separately disaggregated for Investment(2) Banking and Capital Markets. This presentation is aligned to our Investment Banking and Capital Markets internal performance measurement.

Net revenues attributed to the Investment return in Jefferies Group LLC Asset Management have been disaggregated to separately present Investment return and Allocated net interest (see footnote 5 below). This disaggregation is intended to increase transparency and to make clearer(3) actual Investment return. We believe that aggregating Investment return and Allocated net interest would obscure the Investment return by including an amount that is unique to Jefferies Group LLC's credit spreads, debt maturity profile, capital structure, liquidity risks and allocation methods.

Includes net interest expense of $2.3 million, $4.9 million and $6.4(4) million for the quarters ended February 28, 2021, November 30, 2020 and February 29, 2020, respectively.

Allocated net interest represents the allocation of Jefferies Group LLC's(5) long-term debt interest expense to Jefferies Group LLC's Asset Management, net of interest income on Jefferies Group LLC's Cash and cash equivalents and other sources of liquidity (refer to page 8).

VaR estimates the potential loss in value of Jefferies Group LLC's trading positions due to adverse market movements over a one-day time horizon with(6) a 95% confidence level. For a further discussion of the calculation of VaR, see "Value-at-Risk" in Part II, Item 7 "Management's Discussion and Analysis" in Jefferies Group LLC's Annual Report on Form 10-K for the year ended November 30, 2020.

Jefferies Group LLC and Subsidiaries

Financial Highlights

(Amounts in Millions, Except Where Noted)

(Unaudited)

Quarter Ended

February 28, 2021

November 30, 2020

February 29, 2020

Financial position:

Total assets (1)

$

51,386

$

47,752

$

46,203

Average total assets for the period (1)

$

59,774

$

56,503

$

55,333

Average total assets less goodwill and intangible assets for the period (1)

$

57,967

$

54,807

$

53,518

Cash and cash equivalents (1)

$

6,707

$

7,112

$

4,901

Cash and cash equivalents and other sources of liquidity (1) (2)

$

8,114

$

8,605

$

6,371

Cash and cash equivalents and other sources of liquidity - % total assets (1) (2)

15.8

%

18.0

%

13.8

%

Cash and cash equivalents and other sources of liquidity - % total assets less goodwill and intangible assets (1) (2)

16.4

%

18.7

%

14.4

%

Financial instruments owned (1)

$

18,571

$

17,686

$

17,897

Goodwill and intangible assets (1)

$

1,807

$

1,805

$

1,810

Total equity (including noncontrolling interests) (1)

$

6,556

$

6,366

$

6,332

Total Jefferies Group LLC member's equity (1)

$

6,540

$

6,349

$

6,313

Tangible Jefferies Group LLC member's equity (1) (3)

$

4,733

$

4,543

$

4,503

Level 3 financial instruments:

Level 3 financial instruments owned (1) (4)

$

365

$

379

$

346

Level 3 financial instruments owned - % total assets (1) (4)

0.7

%

0.8

%

0.7

%

Level 3 financial instruments owned - % total financial instruments (1) (4)

2.0

%

2.1

%

1.9

%

Level 3 financial instruments owned - % tangible Jefferies Group LLC member's equity (1) (4)

7.7

%

8.3

%

7.7

%

Other data and financial ratios:

Total long-term capital (1) (5)

$

13,237

$

13,022

$

12,706

Leverage ratio (1) (6)

7.8

7.5

7.3

Tangible gross leverage ratio (1) (7)

10.5

10.1

9.9

Number of trading days

60

63

61

Number of trading loss days

9

3

4

Average firmwide VaR (8)

$

16.02

$

14.92

$

7.39

Number of employees, at period end

3,984

3,922

3,822

Jefferies Group LLC and Subsidiaries

Financial Highlights

(Amounts in Millions, Except Where Noted)

(Unaudited)



Quarter Ended

February November February 28, 30, 29, 2021 2020 2020

Financial position:

Total assets (1) $ 51,386 $ 47,752 $ 46,203

Average total assets for the period (1) $ 59,774 $ 56,503 $ 55,333

Average total assets less goodwill and $ 57,967 $ 54,807 $ 53,518 intangible assets for the period (1)



Cash and cash equivalents (1) $ 6,707 $ 7,112 $ 4,901

Cash and cash equivalents and other $ 8,114 $ 8,605 $ 6,371 sources of liquidity (1) (2)

Cash and cash equivalents and othersources of liquidity - % total assets (1) 15.8 % 18.0 % 13.8 %(2)

Cash and cash equivalents and othersources of liquidity - % total assets less 16.4 % 18.7 % 14.4 %goodwill and intangible assets (1) (2)



Financial instruments owned (1) $ 18,571 $ 17,686 $ 17,897

Goodwill and intangible assets (1) $ 1,807 $ 1,805 $ 1,810



Total equity (including noncontrolling $ 6,556 $ 6,366 $ 6,332 interests) (1)

Total Jefferies Group LLC member's equity $ 6,540 $ 6,349 $ 6,313 (1)

Tangible Jefferies Group LLC member's $ 4,733 $ 4,543 $ 4,503 equity (1) (3)



Level 3 financial instruments:

Level 3 financial instruments owned (1) $ 365 $ 379 $ 346 (4)

Level 3 financial instruments owned - % 0.7 % 0.8 % 0.7 %total assets (1) (4)

Level 3 financial instruments owned - % 2.0 % 2.1 % 1.9 %total financial instruments (1) (4)

Level 3 financial instruments owned - %tangible Jefferies Group LLC member's 7.7 % 8.3 % 7.7 %equity (1) (4)



Other data and financial ratios:

Total long-term capital (1) (5) $ 13,237 $ 13,022 $ 12,706

Leverage ratio (1) (6) 7.8 7.5 7.3

Tangible gross leverage ratio (1) (7) 10.5 10.1 9.9



Number of trading days 60 63 61

Number of trading loss days 9 3 4

Average firmwide VaR (8) $ 16.02 $ 14.92 $ 7.39



Number of employees, at period end 3,984 3,922 3,822

Jefferies Group LLC and Subsidiaries

Financial Highlights - Footnotes

(1)

Amounts pertaining to February 28, 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 February 28, 2021.

(2)

At February 28, 2021, other sources of liquidity include high quality sovereign government securities and reverse repurchase agreements collateralized by U.S. government securities and other high quality sovereign government securities of $991 million, in aggregate, and $416 million, being the estimated amount of additional secured financing that could be reasonably expected to be obtained from Jefferies Group LLC's financial instruments that are currently not pledged after considering reasonable financing haircuts. The corresponding amounts included in other sources of liquidity at November 30, 2020 were $1,180 million and $313 million, respectively, and at February 29, 2020, were $638 million and $832 million, respectively.

(3)

Tangible Jefferies Group LLC member's equity (a non-GAAP financial measure) represents total Jefferies Group LLC member's equity less goodwill and identifiable intangible assets. We believe that tangible Jefferies Group LLC member's equity is meaningful for valuation purposes, as financial companies are often measured as a multiple of tangible equity, making these ratios meaningful for investors.

(4)

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.

(5)

At February 28, 2021, November 30, 2020 and February 29, 2020, total long-term capital includes Jefferies Group LLC's long-term debt of $6,681 million, $6,656 million and $6,374 million, respectively, and total equity. Long-term debt included in total long-term capital is reduced by amounts outstanding under the revolving credit facility, amounts from secured term loans and the amount of debt maturing in less than one year, as applicable.

(6)

Leverage ratio equals total assets divided by total equity.

(7)

Tangible gross leverage ratio (a non-GAAP financial measure) equals total assets less goodwill and identifiable intangible assets divided by tangible Jefferies Group LLC member's equity. The tangible gross leverage ratio is used by rating agencies in assessing Jefferies Group LLC's leverage ratio.

(8)

VaR estimates the potential loss in value of Jefferies Group LLC's 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 7 "Management's Discussion and Analysis" in Jefferies Group LLC's Annual Report on Form 10-K for the year ended November 30, 2020.

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 Group LLC and Subsidiaries

Financial Highlights - Footnotes



Amounts pertaining to February 28, 2021 represent a preliminary estimate as(1) 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 February 28, 2021.



At February 28, 2021, other sources of liquidity include high quality sovereign government securities and reverse repurchase agreements collateralized by U.S. government securities and other high quality sovereign government securities of $991 million, in aggregate, and $416 million, being the estimated amount of additional secured financing that(2) could be reasonably expected to be obtained from Jefferies Group LLC's financial instruments that are currently not pledged after considering reasonable financing haircuts. The corresponding amounts included in other sources of liquidity at November 30, 2020 were $1,180 million and $313 million, respectively, and at February 29, 2020, were $638 million and $832 million, respectively.



Tangible Jefferies Group LLC member's equity (a non-GAAP financial measure) represents total Jefferies Group LLC member's equity less goodwill and(3) identifiable intangible assets. We believe that tangible Jefferies Group LLC member's equity is meaningful for valuation purposes, as financial companies are often measured as a multiple of tangible equity, making these ratios meaningful for investors.



Level 3 financial instruments represent those financial instruments(4) classified as such under Accounting Standards Codification 820, accounted for at fair value and included within Financial instruments owned.



At February 28, 2021, November 30, 2020 and February 29, 2020, total long-term capital includes Jefferies Group LLC's long-term debt of $6,681(5) million, $6,656 million and $6,374 million, respectively, and total equity. Long-term debt included in total long-term capital is reduced by amounts outstanding under the revolving credit facility, amounts from secured term loans and the amount of debt maturing in less than one year, as applicable.



(6) Leverage ratio equals total assets divided by total equity.



Tangible gross leverage ratio (a non-GAAP financial measure) equals total(7) assets less goodwill and identifiable intangible assets divided by tangible Jefferies Group LLC member's equity. The tangible gross leverage ratio is used by rating agencies in assessing Jefferies Group LLC's leverage ratio.



VaR estimates the potential loss in value of Jefferies Group LLC's trading positions due to adverse market movements over a one-day time horizon with a(8) 95% confidence level. For a further discussion of the calculation of VaR, see "Value-at-Risk" in Part II, Item 7 "Management's Discussion and Analysis" in Jefferies Group LLC's Annual Report on Form 10-K for the year ended November 30, 2020.

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):

Three Months Ended February 28, 2021



Net income attributable to Jefferies Financial Group common $ 582,435 shareholders (GAAP)

Intangible amortization expense, net of tax 2,604

Adjusted net income (non-GAAP) $ 585,039

Annualized adjusted net income (non-GAAP) $ 2,340,156



November 30, 2020



Shareholders' equity (GAAP) $ 9,403,893

Less: Intangible assets, net and goodwill (1,913,467 )

Less: Deferred tax asset (393,687 )

Less: Weighted average year-to-date impact of 2021 cash (68,714 )dividends and share repurchases

Adjusted tangible shareholders' equity (non-GAAP) $ 7,028,025



Adjusted return on tangible equity 33.3 %

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):

February 28, 2021



Book value (GAAP) $ 9,745,862

Redeemable convertible preferred shares converted to common 125,000 shares (1)

Stock options (2) 65,462

Intangible assets, net and goodwill (1,914,322 )

Adjusted tangible book value (non-GAAP) $ 8,022,002



Common shares outstanding (GAAP) 246,703

Restricted stock units ("RSUs") 19,712

Redeemable convertible preferred shares converted to common 4,441 shares (1)

Stock options (2) 2,791

Other 1,104

Fully diluted shares outstanding (non-GAAP) (3) 274,751



Book value per share outstanding $ 39.50

Tangible book value per fully diluted share outstanding $ 29.20

(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 February 28, 2021 of 2,791,000 multiplied by the weighted average exercise price of $23.45 on February 28, 2021. Stock options added to fully diluted shares are equal to the total stock options outstanding on February 28, 2021.

(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. 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.

Jefferies Financial Group Shareholders' Equity GAAP Reconciliation

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

Redeemable convertible preferred shares added to book value and fully(1) diluted shares assume that the redeemable convertible preferred shares are converted to common shares.

Stock options added to book value are equal to the total number of stock options outstanding as of February 28, 2021 of 2,791,000 multiplied by the(2) weighted average exercise price of $23.45 on February 28, 2021. Stock options added to fully diluted shares are equal to the total stock options outstanding on February 28, 2021.

Fully diluted shares outstanding include vested and unvested RSUs as well as the target number of RSUs issuable under the senior executive(3) compensation plans. 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.

Jefferies Financial Group Shareholders' Equity GAAP Reconciliation

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

February 28, March 31, 2021 2018



Shareholders' equity (GAAP) $ 9,745,862 $ 10,259,080

Intangible assets, net and goodwill (1,914,322 ) (2,450,957 )

Tangible shareholders' equity (non-GAAP) $ 7,831,540 $ 7,808,123

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CONTACT: Teresa S. Gendron Chief Financial Officer Jefferies Financial Group Inc. Tel. (212) 460-1932 Matt Larson Chief Financial Officer Jefferies Group LLC Tel. (212) 284-2338