Jefferies Financial Group Inc. · NYSE:JEF
Jefferies Financial — Investor Day (October 2023)
74 slides from Jefferies Financial's investor day presentation, Oct 16, 2023
Slide 1: Jefferies Financial Group Inc. 2023 Investor Meeting
Exhibit 99.1 Jefferies Financial Group Inc. 2023 Investor Meeting th Monday, October 16 , 2023
Slide 2: Important Disclosures
Important Disclosures Forward Looking Statements. Certain statements contained herein may constitute “forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and/or the Private Securities Litigation Reform Act of
Slide 3: 2023 Investor Meeting Agenda
2023 Investor Meeting Agenda Start Time Session Speaker(s) Rich Handler, CEO 9:00 AM Overview Brian Friedman, President 9:20 AM Financial Review Matt Larson, CFO Andrea Lee, Co-Head of Global Investment Banking 9:40 AM Investment Banking Raphael Bejarano, Co-Head of Global Investment Banking Alejand
Slide 4: Overview
Overview Rich Handler, CEO Brian Friedman, President
Slide 5: The Jefferies Difference
The Jefferies Difference Jefferies is one of the world’s leading investment banking and capital market firms We believe our success is grounded in our balance of extreme urgency and long-term perspective. We know there is no shortcut to building our capabilities and client base. We have patiently bu
Slide 6: Inflection Point: Our Time
Inflection Point: Our Time Growth led by Investment Banking and further fueled by three factors: Major Broader and Cyclical Competitive Deeper Jefferies Recovery Opening Platform 6
Slide 7: Investing in Top Investment Banking Talent
Investing in Top Investment Banking Talent… We have increased MDs by +148 (70%) since 2019 + + Projected 2023 + 2022 + 2021 2020 As of Projected 11/30/2019 12/1/2023 7
Slide 8: …Across the Globe
…Across the Globe 2019 Americas EMEA APAC +83 MDs +44 MDs +21 MDs (1) 33 Offices (+55%) (+87%) (+207%) 269 non-U.S. Investment Stockholm Bankers Amsterdam London Toronto 61 non-U.S. MDs Frankfurt Boston San Francisco Tokyo Chicago New York Milan Tel Aviv Paris 2023 Madrid Hong Kong Mumbai Dubai Char
Slide 9: Positioned to Capture Greater Market Share
Positioned to Capture Greater Market Share Our commitment to MD recruitment, as well as training and promotions, enhance the opportunity to maximize our competitive positioning 360 Total IB MDs (Projected 12/1/23) +186 57% of our MDs have either been hired (36%) or Less than promoted (21%) since 11/
Slide 10: Investment Banking Growth
Investment Banking Growth In a cyclical downturn for …we have grown revenue… …and improved our market position Investment Banking… (1) (2) Market Size Core Investment Banking Revenue JEF Market Position ($ Billions) ($ Billions) M&A, ECM & LevFin LTM Q2’23 2019 -15% +40% $57.3 $2.1 Global $48.7 #12
Slide 11: Cash Equities Growth
Cash Equities Growth Success in Regional Growth (1) (2)(3) Total Equities Revenue U.S. Cash Equities Market Share ($ Billions) $1.1 +43% +130bps 5.6% $0.8 4.3% 2019 LTM Q3'23 2019 1H'23 (2)(3) Asia (Ex.China) Cash Equities Market Share (2)(3) Pan-Europe Cash Equities Market Share +175bps +217bps 4.9
Slide 12: Core Credit Products Growth
Core Credit Products Growth Building Upon Areas of Strength (1) (2) Total Fixed Income Revenue Global Core Credit Market Share ($ Billions) +59% +130bps $1.1 3.9% $0.7 2.6% 2019 2022 2019 LTM Q3'23 12 See pages 65-70 at the back of this presentation for endnotes.
Slide 13: Alternative Asset Management – Opportunity
Alternative Asset Management – Opportunity Jefferies Strategy Management Fee Growth Management Fee Revenue We are committed to growing our fee revenue to realize ($ Millions) the stable, growing, high margin opportunity that exists. Our approach is one where Jefferies maintains $61 +162% investments
Slide 14: Path to Accelerating Momentum
Path to Accelerating Momentum Grow Jefferies Brand Leverage Technology and ESG Capitalize on Alliance with SMBC Drive Market Share Gains Continue to Invest in Top Talent and Talent Development 14
Slide 15: Continue to Invest in Top Talent
Continue to Invest in Top Talent... Driving significant Broad multinational A growing and diverse workforce regional expansion footprint ▪ Dubai ▪ 1,250+ employees (+30%) added since 2019, 5,500+ with almost half outside the US ▪ Madrid Employees ▪ Melbourne ▪ 550+ investment banking professionals 4
Slide 16: …And Talent Development
…And Talent Development Starting almost six Providing robust Deepening our Continuing to years ago, doubled leadership development commitment to DEI, enhance firmwide down on talent and mentoring rolled out Inclusive performance development at opportunities Leadership Training to management all leve
Slide 17: Capitalize on Alliance with SMBC
Capitalize on Alliance with SMBC (1) SMBC has committed ~$3.4 billion to Jefferies and intends to increase its share stake to 15% Our strengthened and ...provides enhancedclient …including for jointly covered expanding alliance… capabilities… investment grade clients. Greater global collaboration an
Slide 18: Accelerating Momentum since the Alliance Expansion
Accelerating Momentum since the Alliance Expansion Closed Transactions with SMBC Since May 2023 (1) (1) Includes the largest Global IPO in 2023 (Arm) and the largest European convertible bond (Cellnex) in more than 2 years Energy October 2023 Technology September 2023 Real Estate August 2023 Finance
Slide 19: Opportunities through Long-Term Strategic Partnerships
Opportunities through Long-Term Strategic Partnerships Berkadia Jefferies Finance LLC Berkadia commercial real estate finance and investment sales J.V. A 50/50 J.V. with MassMutual, established in 2004, Jefferies with Berkshire Hathaway, established in 2009 Finance (JFIN) is a leading commercial fin
Slide 20: Leverage Technology and ESG
Leverage Technology and ESG ESG Technology ◼ Provide distinctive advice and thought ◼ Digital network drives information leadership to our clients in ESG and sharing and workflow management sustainable finance ◼ Implement an artificial intelligence ◼ Make a positive difference in the strategy driven
Slide 21: Strengthening our Brand
Strengthening our Brand Jefferies is emerging as one of a handful of global investment banking leaders. Investment Banking: Global Rankings Jump #6 #10 (1) LTM Q2’23 in 2019 Advisory & ECM “Jefferies ranked third in 2022, up from seventh place in 2021, an “unprecedented” Jefferies and SMBC jump…” pa
Slide 22: Our Process
Our Process We spoke to more than 500 clients, prospects, intermediaries and internal stakeholders to understand the essence of our brand. 22
Slide 23: Their Feedback is our Brand Blueprint
Their Feedback is our Brand Blueprint Decision makers told us that their choice is rarely about league tables or balance sheets. It’s about trust and insight. They told us that Jefferies: Furthermore, they choose Jefferies over competitors because they: • Provides a partnership based on trust • Get
Slide 24: Three Qualities Set Jefferies Apart
Three Qualities Set Jefferies Apart Insightful Driven High Touch Our structure and culture We lead with ideas and Every client relationship is are designed to deliver for advice. personal. clients. • We’re incisive and personal: We • We offer bespoke advice, care about our clients’ business • We ant
Slide 25: Our Future Is Now
Our Future Is Now Focused on Total Shareholder Return Increasingly Unique Franchise Low-Risk Fee Revenue Clear Path to Driving Growth Accelerating Momentum 25
Slide 26: Financial Review
Financial Review Matt Larson, CFO
Slide 27: Driving Forward and Building Long-Term Value in Challenging Markets
Driving Forward and Building Long-Term Value in Challenging Markets Despite a Challenging We Have Elevated Through Environment… Market Share Gains Macro Environment $2.1B vs. $1.5B ▪ Volatility in markets (1)(2) Core Investment Banking Revenues ▪ Geopolitical uncertainty LTM Q3’23 vs. 2019 ▪ Sharply
Slide 28: A Step Change in Our Core Business' Revenue
A Step Change in Our Core Business’ Revenue (1)(2) Core Investment Banking & Capital Markets Revenues +46% Since 2019 (1)(2) Core Investment Banking Revenue $2.1B +40% $1.5B $0.3 $0.5 $0.4 $0.4 $1.3 $0.8 2019 LTM Q3'23 Advisory Equity Underwriting Debt Underwriting (2) Capital Markets Revenue $2.2B
Slide 29: Commitment to Shareholder Return
Commitment to Shareholder Return Capital Returned: (2018 - YTD Q3’23) Buybacks: $3.8B $5.9B Quarterly Dividends: $1.2B Special Dividends: $1.0B $5.0B Total: $5.9B $3.9B $3.4B $2.4B $1.3B 2018 2019 2020 2021 2022 YTD Q3'23 Cumulative Regular Dividends Cumulative Special Dividends Cumulative Share Rep
Slide 30: A Leader in Dividend & Stock Price Growth
A Leader in Dividend & Stock Price Growth (1) Stock Price Growth : (12.31.19 vs. 9.29.23) Jefferies: 79% 79% (1)(2) Peer Max: 60% $36.63 $20.42 12.31.19 9.29.23 (1) Dividend Growth : (3) (2019 vs. Annualized 2023) Jefferies: 140% $1.20 (2) 140% Peer Avg: 85% $0.50 2019 Annualized 2023 30 See pages 6
Slide 31: Creating Value for Our Shareholders
Creating Value for Our Shareholders Long-term shareholders benefit from our focus on growing our market position and managing our capital utilization (1) Fully Diluted Shares Outstanding (Millions) -33% 374 317 252 12/31/2016 11/30/2019 8/31/2023 31 See pages 65-70 at the back of this presentation f
Slide 32: Increased Productivity via Strategic Actions & Investments
Increased Productivity via Strategic Actions & Investments A focused investment in technology and allocation of resources to our core businesses (1) Revenue per Head ($ Thousands) Investments in key technological infrastructure and +12% $926 new systems underpin our employees’ ability to operate mor
Slide 33: Investing in Technology & Growth
Investing in Technology & Growth Our largest expense categories align with our focus on continuing to grow and invest in our business Technology, Communications & Transaction & Client (1) Professional Services Related Costs ◼ Development of Madison, our in-house ◼ Expanded product offerings CRM tool
Slide 34: Capital, Liquidity & Funding
Capital, Liquidity & Funding Stable capital, liquidity, and funding are core principles As of August 31, 2023 $10.8B of Cash & Cash Equivalents & Other Sources of Liquidity Capital 4.0% Level 3 Assets Owned as a % of Total Financial Instruments Owned $7.8B Tangible Equity Liquidity (1) 6.9x Tangible
Slide 35: Investment Banking
Investment Banking Andrea Lee, Co-Head of Global Investment Banking Raphael Bejarano, Co-Head of Global Investment Banking Alejandro Przygoda, Co-Head of Global Investment Banking
Slide 36: Key Developments since 11/30/2019
Key Developments since 11/30/2019 Jefferies has continued to invest in Investment Banking Strengthened key Expanded international Strategic alliance… Leadership transition… teams or expanded coverage in… coverage in… ▪ Consumer ▪ Australia With SMBC ($284 billion non-▪ Next generation leadership Jap
Slide 37: Leading Global Footprint across Every Major Region
We Have Built a Leading Global Footprint, with Significant Reach Across Every Major Region (1) Globally, we have over 1,400 Investment Bankers, including 319 Managing Directors, operating in 17 countries (2) JEF Rank by Region (M&A & ECM) Americas FYTD Q3’23 2019 We have built a global network acros
Slide 38: Revenues Increased 40% Since 2019; Fee Pools Declined by 15%
Revenues Increased 40% Since 2019; Fee Pools Declined by 15% (1) ▪ LTM ended Q3 2023 Core Investment Banking revenues were $2.1 billion ▪ As of Q3’23 our footprint has increased by 107 Managing Directors since FY19, including 74 internal promotions (1) Core Investment Banking Revenues ($ Billions) $
Slide 39: Deep and Expanding Sector Expertise
Deep and Expanding Sector Expertise We now have in place specialized MD coverage of almost all key industry subsectors Blue denotes recent addition of or increased coverage of subsector since the beginning of Fiscal 2020 TMT Healthcare Industrials ▪ Communications Equipment▪ Marketing Services ▪ Acu
Slide 40: Our Position and Team have Continuously Strengthened
Our Position and Team have Continuously Strengthened Over the Last Five Years LTM Q2’23 LTM Q2’23 Global Rankings Global Rankings (1)(2) (1)(2) Advisory, ECM & DCM Advisory & ECM ($ Billions) ($ Billions) Total LTM Q2’23 Ranking Δ Since LTM Q2’23 Ranking Δ Since Rank Rank Assets Revenue FY 2019 Reve
Slide 41: Financial Sponsor Franchise
Financial Sponsor Franchise th st 5 800 1 in Global Sponsor-Backed Private Equity Firms Covered by in U.S. Sponsor M&A (1) (1) Investment Banking Approximately 30 Managing Directors by number of deals LTM Q3’23 Global Rankings (1) Sponsor-Backed M&A, ECM, LevFin Fee Market Ranking Δ Since Rank Share
Slide 42: Strategic Priorities
Strategic Priorities Grow our market share by monetizing the breadth, scale and quality of our global team Leverage our alliance with SMBC to better serve our clients, and to serve more clients Drive growth in serving corporate clients, to complement our sponsor franchise Continue to focus on develo
Slide 43: Equities
Equities Peter Forlenza, Global Head of Equities
Slide 44: Step Change in Market Position
Step Change in Market Position Our Business has Experienced a Significant “Step Change” in Revenue, Continuing Our Momentum (1) (1) 3.2% Market Share 4.9% Market Share (2) in 2019 in 2023 (3) Total Equities Revenue $1,101 ($ Millions) Achieved against the Achieved against the $768 backdrop of a very
Slide 45: Global Cash Equities Market Share Growth
(1) Global Cash Equities Market Share Growth (2) Consistent Market Share Gains Driving Milestone Competitive Positioning Key Rankings (5) Global US Pan-Europe Asia ex. China st 1 (4) Global Convertibles 172bps Growth 130bps Growth 175bps Growth 217bps Growth 5.6% st 1 (4) US Electronic Trading Produ
Slide 46: Advisory – Global Research
Advisory – Global Research Continued Expansion in Global Research with Differentiated Thought Leadership KEY RESEARCH HIGHLIGHTS RECORD RESULTS US #6 Europe #6 Asia #3 Most improved ranking in the US survey Record II ranking in 2023 with Maintained #3 Asiamoney ranking (4) nd (2)(5) with 17 ranked a
Slide 47: Investment in Advisory Driving Market Share and Revenue Gains
Investment in Advisory Driving Market Share and Revenue Gains (1) Jefferies Research Payments are Market Leading Provider Provider Provider Provider Provider Provider Provider Provider Provider Provider Jefferies A B C D E F G H I J Change in Payment Revenue (CY 2018 vs. H1’23 Annualized) 38.1% 14.0
Slide 48: Driving Strategic Growth
Driving Strategic Growth We have significantly expanded our footprint in the last 5 years, enabling us to improve our client breadth and service all clients that comprise our addressable wallet. Grow Existing Businesses and Continue Globalizing the Franchise, while Deepening and Broadening our Clien
Slide 49: Driving Strategic Growth: Expanding our Total Addressable Market
Driving Strategic Growth (1) Expanding our Total Addressable Market “TAM” Grow Existing Businesses and Continue Globalizing the Franchise, while Deepening and Broadening our Client 1 (1) Expanded TAM Footprint ~$50-60bn Prime Brokerage Expand our Total Addressable Market by Building Swaps 2 Client-R
Slide 50: Fixed Income
Fixed Income Fred Orlan, Global Head of Fixed Income
Slide 51: Business Performance
Business Performance Long-term investments in the strength and diversity of our franchise have resulted in durable revenue generation (1) Total Fixed Income Revenue ($ Billions) Growing headcount abroad Strategic deployment of capital $1.3 (2) Period End Headcount Average Capital Record best +5% +12
Slide 52: Driving our Opportunity Curve Higher
Driving our Opportunity Curve Higher Sustained focus on long-term growth of our core businesses (1) (1) Global Core Credit Client Wallet Jefferies Client Wallet Growth Momentum 2019 - 2022 2023 & Beyond Jefferies voted #1 >1.5x á70% ~6% share for Net Positive Wallet Strong (1) á1.7x Opportunity Fran
Slide 53: Ongoing Commitment to be the Partner of Choice
Ongoing Commitment to be the “Partner of Choice” for our Clients Deepening Expanding Improving (2) Client Relationships Global Platform Service Quality Rankings (1) Top 100 Global Fixed Income Clients International Fixed Income Client Revenues Jefferies Top 10 Dealer Rankings Client Revenues Interna
Slide 54: Focus on Enhancing our Electronic Trading Capabilities
Focus on Enhancing our Electronic Trading Capabilities Technology Collaboration Product Growth Efficiently leveraging technology Integrating our high-touch voice & Extending our electronic trading and incorporating AI to provide our low-touch electronic capabilities capabilities throughout our Fixed
Slide 55: Strategic Focus
Strategic Focus Core Credit Focus Aligned with Investment Banking “Partner of Choice” Unique Ideas & Differentiated Solutions for clients Globalize Franchise and Best-in-Class Service Expand Client-Requested Capabilities Realize higher Globalize Franchise and quality share Outstanding High & Low Tou
Slide 56: Asset Management
Asset Management Nick Daraviras, Co-Head of Asset Management Sol Kumin, Co-Head of Asset Management
Slide 57: Leucadia Asset Management – Overview
Leucadia Asset Management – Overview ▪ Our alternative asset management platform offers an innovative range of investment strategies to predominantly institutional clients through directly owned and affiliated managers ▪ We leverage broader Jefferies to source managers, provide them with operational
Slide 58: Fee Growth
Fee Growth ▪ Long term goal is stability and growth of fee revenue, as evidenced by 2023’s increased management fee revenue ▪ In a difficult fundraising environment, new products and offerings have supported stable AUM at affiliated managers, as we continue to recycle capital to support future strat
Slide 59: Performance Profile
Performance Profile (1) Total Select Asset Management Revenue (2) LAM LAM ex Oak Hill HFRI Index (Fiscal Year 2020 vs LTM Q3’23) $ Millions Fiscal YTD (9 month) 7.7% n/a 5.9% 381 3-Year Total Return 45.4% 31.8% 21.4% 337 283 Total Investment Return (Fiscal Year 2020 vs LTM Q3’23) 246 $ Millions 260
Slide 60: Capital Raising Update
Capital Raising Update ▪ Marketing & Investor Relations team includes 25 professionals (up from 13 in FY 2020), providing global (1) Aggregate NAV-Equivalent AUM client coverage (Fiscal Year End 2019 vs Current 2023) $ Billions 29 ▪ Added new team member based in Singapore to enhance coverage of the
Slide 61: Our Platforms and Strategies
Our Platforms and Strategies (1) ($ Billions) Strategy AUM Invested Description (2) Multi $1.8 2020 Asia-focused multi-manager platform investing across equities, credit, fixed income/rates, and FX (2) Equities $3.6 2019 Market-neutral equity platform focused on fundamental and tactical strategies g
Slide 62: Strategic Priorities
Strategic Priorities Grow fee-generating third party assets; prospect of long-term stable cash flows Earn strong return on invested capital; recycle capital to support new strategies Continue to add new strategies; three were added in FY 2023 Manage cost and mitigate risk • Leverage support infrastr
Slide 63: Q&A Session
Q&A Session Please submit questions using the webcast question box
Slide 64: Appendix
Appendix
Slide 65: Endnotes
Endnotes These notes refer to page 8 (1) Map does not show all office locations. These notes refer to page 10 (1) Source of data: Dealogic. (2) Core Investment Banking Revenue is a non-GAAP financial measure. See Appendix for Non-GAAP reconciliation. (3) Source: Investment banking market position ba
Slide 66: Endnotes
Endnotes These notes refer to page 17 (1) SMBC’s $2.25 billion financing in 2021 and investments will, at market prices as of 4/27/23, the date of the press release announcing an expansion of the Jefferies and SMBC strategic alliance, result in a financial commitment to Jefferies of approximately $3
Slide 67: Endnotes
Endnotes These notes refer to page 28 (1) Core Investment Banking Revenue is a non-GAAP measure. See Appendix for Non-GAAP reconciliation. (2) Revenues are presented net of allocations of interest income and interest expense. During the third quarter ended August 31, 2023, we refined our allocated n
Slide 68: Endnotes
Endnotes These notes refer to page 38 (1) Core Investment Banking Revenue is a non-GAAP measure. See Appendix for Non-GAAP reconciliation. (2) Source: Dealogic LTM as of 8/31/23. These notes refer to page 40 (1) Source: Investment banking market position based on data compiled by Jefferies and deriv
Slide 69: Endnotes
Endnotes These notes refer to page 46 (1) Reflects our internal Equity Research coverage from 2019 versus 2023. (2) Asia includes our co-branded coverage. (3) US ranking reflects 2022 Institutional Investor results. (4) Europe ranking reflects 2023 Institutional Investor results. (5) Asia ranking re
Slide 70: Endnotes
Endnotes These notes refer to page 53 (1) # of Clients based on accounts with >$1m in Annualized Client Revenues. (2) Rankings sourced from Coalition Greenwich 2022 Fixed Income Study. (3) Period reflects Q3’23 YTD annualized metrics. These notes refer to page 54 (1) MarketAxess 9M YTD August 2023.
Slide 71: Reconciliation of Core Investment Banking (non-GAAP measure)
Reconciliation of Core Investment Banking (non-GAAP measure) ($ Billions) (2) 2019 2020 2021 2022 LTM 8/31/2023 Total Investment Banking Revenue (GAAP) $1.5 $2.6 $4.7 $2.9 $2.3 (3) (3) (3) (3) (3) Other Investment Banking Revenue $(0.0) $0.1 $0.3 $0.1 $0.2 (1) (4) Core Investment Banking Revenue (no
Slide 72: Reconciliation of Fully Diluted Shares Outstanding
Reconciliation of Fully Diluted Shares Outstanding (non-GAAP Financial measure) ($ Millions except Per Share Amount) (Millions) As Of 11/30/2016 11/30/2019 8/31/2023 Common Shares Outstanding (GAAP) 359 292 210 Restricted stock units ( RSUs ) 14 22 14 (1) Convertible preferred shares 0 0 21 (2) Stoc
Slide 73: Reconciliation of Tangible Assets, Tangible Equity and Tangible Gross Leverage Ratio
Reconciliation of Tangible Assets, Tangible Equity and Tangible Gross Leverage Ratio (non-GAAP Financial measures) ($ Millions except Leverage Ratio) As Of 8/31/2023 Total Assets (GAAP) $56,045 Intangible assets, net and goodwill ($1,872) Tangible assets (non-GAAP) $54,173 Note: The above tables rec
Slide 74: Reconciliation of Total Select Asset Management Revenue (non-GAAP measure)
Reconciliation of Total Select Asset Management Revenue (non-GAAP measure) ($ Millions) 2020 2021 2022 LTM 8/31/2023 Asset mgmt. fees and revenues (GAAP) $27 $121 $89 $88 Investment Return (GAAP) $256 $260 $157 $248 Total Select Asset Management Revenue $283 $381 $246 $337 Note: The above table reco
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