Jefferies Financial Group Inc. · NYSE:JEF
Jefferies Financial — Investor Presentation (January 2007)
24 slides from Jefferies Financial's investor presentation, January 2007
Slide 1: Jefferies
Jefferies &
Slide 2: Our Mission
Our Mission To build the leading investment bank and institutional securities firm serving growing and mid-sized companies and their investors – led by the strongest capital markets trading platform in the industry. Sales & Trading Investment Growing & Mid-sized Securities Banking Companies Research
Slide 3: Jefferies Today
Jefferies Today Seven consecutive years of record revenues and earnings with Q4 2006 net revenues up 9% over Q4 2005, and full year 2006 net revenues up 21% over 2005 Dominant position in target Middle Market Continued diversification of earnings as a firm overall and within virtually all oper
Slide 4: 2006 Highlights
2006 Highlights Record Results 2003 2006 Improvement Record Gross Revenues $927 million $2.0 billion +112% Record Net Revenues $830 million $1.5 billion +76% Record EBITDA(1) $257 million $874 million +240% Record Net Earnings $84 million $206 million +145% Record EPS $0.71 $1.42 +100% Book Value $8
Slide 5: Demonstrated Steady Growth
Demonstrated Steady Growth Net Revenues Net Earnings Book Value ($Millions) ($Millions) ($Millions) CAGR 21% $1,458 CAGR 34% CAGR 26% $206 $1,600 $1,205 $157 $1,287 $1,058 $131 $1,039 $830 $838 $84 $675 $629 $63 2002 2003 2004 2005 2006 2002 2003 2004 2005 2006 2002 2003 2004 2005 2006 EBITDA EPS Ma
Slide 6: Investment in Human Capital
Investment in Human Capital Jefferies’ variable expense structure is responsive to all economic environments – more than 60% of total compensation expense is variable Expanded Production staff – Increased revenue generating employees from 820 to 1,648, or 101% increase Expanded Legal and Compl
Slide 7: Aligned & Motivated Management Team
Aligned & Motivated Management Team FULLY DILUTED MARKET CAPITALIZATION: $4.4 BILLION Years at Years in Name Title Jefferies the Industry Ownership%(1) Richard B. Handler(2) Chairman and CEO 16 19 9.4% Chairman, Executive Brian P. Friedman(2) 5 22 2.3% Committee Joseph A. Schenk(2) CFO 12 16 0.6% Ot
Slide 8: Diversified Net Revenues
Diversified Net Revenues 2006 $1,458mm 2003 8% $830mm 2000 37% $617mm 4% 28% 2% 15% 5% 2% 51% 4% 66% 78% SALES & TRADING INVESTMENT BANKING ASSET MANAGEMENT INTEREST & OTHER 8
Slide 9: Strong Equity Franchise
Strong Equity Franchise Top 5 best execution of all exchange-listed stock trades(1) OTC: #3 trader of combined NASDAQ and Bulletin Board stocks(2) JEF Equity Revenues New Products ($Millions) CAGR 7% $539 ($Millions) 2003 2006 Change $ 55 0 $ 50 0 Bulletin Boards $18.5 $22.9 + 24% Rev (mm) / Vol
Slide 10: Equity Franchise Growth Strategy
Equity Franchise Growth Strategy Electronic and Algorithmic Trading Equity Products Quantitative Trading Prime Brokerage Securities Lending Global Equity Research: – 110 professionals covering 753 U.S. companies – 18 professionals covering 114 International companies – Total of 867 compa
Slide 11: Investment Banking Expansion
Investment Banking Expansion Middle Market Investment Bank of the Year (1) Leading M&A advisor on Wall Street (2) Investment Banking Revenues #1 – Deals under $250 million ($Millions) #4 – Deals under $1 billion CAGR 40% $541 Leading high yield underwriter $495 #1 – U.S. Single B new issues unde
Slide 12: Investment Banking Growth Strategy
Investment Banking Growth Strategy New capital markets initiatives – Hired additional senior professionals – Expanded presence in technology capital markets Continued development of new industry groups – Industrials – Healthcare – Consumer Jefferies Finance LLC – Partners: Joint venture betwee
Slide 13: Investment Banking Product Mix
Investment Banking Product Mix Diversified Products, Services and Industry Expertise 2006 Revenue Aerospace & Defense - 7% M&A and Advisory Restructuring E&P Consumer - 6% 41% 6% 23% Gaming - 3% General – 6% Debt Healthcare - 5% 18% NEW: Industrials Oil Services - 6% 15% Financial Services - 4% Equi
Slide 14: Underwriting & Advisory Rankings
Underwriting & Advisory Rankings 2001 – 2005 Single B New Issues Under $150 Million 2005 Single B New Issues Under $150 Million MANAGER PROCEEDS RANK DEALS MANAGER PROCEEDS RANK DEALS Jefferies & Company, Inc. $3,026.8 1 34 Jefferies & Company, Inc. $415.5 1 5 Banc of America Securities 1,734.9 2 27
Slide 15: Branded Market Presence
Branded Market Presence We never lose sight of your objective. ‘Theaugh ever-changing martats and tng usr condor tates an ees ey to kespycurtrtng ctfectvs on tack At eats, cur mats exper and dagp Maus Irmwiege arabia us to do st tat. ‘Asa ending prone of iquly for ara and iG-cap socks, we ofr you 3
Slide 16: Growing Asset Management
Growing Asset Management Building the infrastructure for a substantial asset management business – total headcount of 71 Managed Assets Asset Management Revenues ($Billions) ($Millions) $5.0 CAGR 46% $120 CAGR 50% $109.6 $4.4 $4.0 $100 $80 $3.0 $60 $2.0 $1.4 $40 $32.8 $1.0 $20 $0.0 $0 2003 2006 2003
Slide 17: Fixed Income & Commodities
Fixed Income & Commodities Strong High Yield Franchise – Focus on “Single B” credits and distressed Fixed Income & Commodities Revenues debt – A top secondary market trader ($Millions) – Makes markets in more than 500 issues with CAGR 27% $245.3 over 300 institutions $250 $200 Convertibles Sales
Slide 18: Growth in Research Coverage
Growth in Research Coverage 28 analysts qualified for The Wall Street Journal’s “Best on the Street” annual survey for their ability to pick stocks and accurately estimate returns Equity Research – U.S. Companies Covered Covered 753 Professionals Companies Equity 110 753 597 505 High Yield 14 380 41
Slide 19: Small and Mid-Cap Focus in Research
Small and Mid-Cap Focus in Research Ranked #1 firm among investment banks for annualized return on analysts’ stock picks – Time Magazine 78% of U.S. equity coverage under $5 billion U.S. Equity Coverage by Market Cap Sectors Under Coverage POST-REORG & $0 – $500 MM 24 % CONSUMER HEALTHCARE SPECIAL S
Slide 20: Strong Capital Position
Strong Capital Position $2.9 billion in total capital As of September 30, 2006 ($Millions) Over $1.1 billion in cash and Long-Term Debt $1,269 short-term investments Series A Convertible Preferred $125 Total Stockholder’s Equity $1,493 Investment grade since debt offering Total Capitalization
Slide 21: Conservative Balance Sheet
Conservative Balance Sheet Conservative Leverage, Coverage, Risk Profile and Liquidity vs. Leading Industry Competitors Long-term Debt to Stockholder’s Equity Adjusted Total Assets(1)/Stockholder’s Equity Bear 441.8% Bear Bear 19.4x Bear Lehman 427.9% Lehman Lehman 14.7x Lehman Goldman 425.5% Goldma
Slide 22: Stock Performance Relative to Peers
Stock Performance Relative to Peers Change in Stock Price January 1, 2000 – January 18, 2007 Bear Lehman Raymond Broker Merrill Goldman A.G. Morgan Charles Knight Jefferies Stearns Brothers James Index (1) Lynch Sachs Edwards Stanley Schwab Trading 435% 296% 289% 277% 184% 129% 123% 109% 14% -25% (1
Slide 23: A global investment bank and institutional securities firm
A global investment bank and institutional securities firm serving growing and mid-sized companies and their investors.
Slide 24: Appendix A – EBITDA Reconciliation
Appendix A – EBITDA Reconciliation Last revision: 01/19/07 EBITDA represents earnings (loss) before income taxes, interest expense, depreciation and amortization and is an approximation of cash flow from operations before tax. The Company uses EBITDA as an internal measure of performance and believe
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