Jefferies Financial Group Inc. · NYSE:JEF
Jefferies Financial — Investor Day (October 2019)
57 slides from Jefferies Financial's investor day presentation, Oct 15, 2019
Slide 1: Jefferies Financial Group Inc. 2019 Investor Meeting
Jefferies Financial Group Inc. 2019 Investor Meeting Wednesday, October 16, 2019 Presentations and Q&A Exhibit 99
Slide 2: Note on Forward Looking Statements
Note on 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 1995, regardi
Slide 3: 2019 Investor Meeting Agenda
2019 Investor Meeting Agenda Q & A – IRQuestions@Jefferies.com 1 Start Time Session Speaker(s) 9:00 AM Overview Rich Handler, CEO Brian Friedman, President 9:20 AM Financial Review Teri Gendron, CFO Peg Broadbent, CFO, Jefferies Group LLC 9:40 AM Investment Banking Ben Lorello, Global Head of Invest
Slide 4: Jefferies Financial Group – Strategic Update
Jefferies Financial Group – Strategic Update We continue solid progress on our strategy of strengthening and expanding our core business of Investment Banking, Capital Markets and Asset Management, while continuing to simplify our structure, heighten our focus, return capital to our shareholders and
Slide 5: Jefferies Financial Group – Capital Returned to Shareholders
Total Shares Outstanding (as of October 14, 2019) (Millions) Jefferies Financial Group – Capital Returned to Shareholders Delivering shareholder return through continued share repurchases and distributions Returned to shareholders $1.0 billion in 2019 to date through share repurchases (including $10
Slide 6: Fair Value of Remaining Merchant Banking Portfolio
Note: Net asset values have been developed in accordance with Accounting Standards Codification (“ASC”) §820, which defines Fair Value as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.”
Slide 7: Jefferies Group – Global Full-Service Capabilities
Stonyrock Jefferies Group – Global Full-Service Capabilities Equity Derivatives Cash Equities Electronic Trading Prime Services ETFs Convertibles Wealth Management Securitized Markets Emerging Markets Investment Grade Rates Municipals TMT Industrials Healthcare Financials Financial Sponsors REGAL Eq
Slide 8: Jefferies Group – Strategic Update
Jefferies Group – Strategic Update We continue to build a leading, client-focused global investment banking firm, seeking to provide clients with insight, expertise and execution Our competitive position has strengthened further, as several major competitors have experienced challenges and may face
Slide 9: Jefferies Group – Priorities
Jefferies Group – Priorities Our priorities are revenue growth and margin expansion, while maintaining our discipline around liquidity and risk management Revenue growth expected to be led by Investment Banking maturation and new hires, as well as Equities and Fixed Income market share gains, as cap
Slide 10: Financial Review
Financial Review Jefferies
Slide 11: Jefferies Financial Group – Operating Results
($ Millions) Jefferies Financial Group – Operating Results 9
Slide 12: Jefferies Financial Group – Balance Sheet Overview
Jefferies Financial Group – Balance Sheet Overview Note: As presented in Jefferies Financial Group public filings. ($ Millions) 10
Slide 13: Jefferies Financial Group – Liquidity Metrics
Jefferies Financial Group – Liquidity Metrics (as of 8/31/19) Consolidated Balance Sheet and Leverage Tangible Assets: $47.3 billion(1) Parent Company Debt-to-Equity Ratio: 0.10x Parent-Level Liquidity Target a parent-level liquidity reserve that provides 24 months of coverage for cash requirement T
Slide 14: Jefferies Group – Revenues by Source
Note: In the first quarter of 2018, we made changes to the presentation of our “Revenues by Source” to better align the manner in which we describe and present the results of our performance with the manner in which we manage our business activities and serve our clients. For a further discussion of
Slide 15: Jefferies Group – Balance Sheet Overview
Jefferies Group – Balance Sheet Overview Note: As presented in Jefferies public filings. Leverage ratio equals total assets divided by total equity. Tangible gross leverage ratio (a non-GAAP financial measure) equals total assets of $43,094 million less goodwill and identifiable intangible assets of
Slide 16: Jefferies Group – Liquidity and Risk Update
Jefferies Group – Liquidity and Risk Update (as of 8/31/19) Low Leverage and Liquid Inventory Ample Excess Liquidity Conservative Funding Model Sound, Long-Term Capital Base Total Assets: $43.1 billion Tangible Leverage: 9.4x(1) Level 3 Financial Instruments Owned as % of Total Inventory: 2.2% Level
Slide 17: Investment Banking
Investment Banking Jefferies
Slide 18: Investment Banking – Overview
Investment Banking – Overview Jefferies Investment Banking is a leading advisor and underwriter to our clients globally 943 investment bankers with deep sector expertise and extensive experience across major industry verticals On-the-ground presence in 13 countries across the world 71% of our LTM re
Slide 19: Investment Banking – Sector, Product and Regional Expansion
Banks Logistics & Transportation Higher Education Chemicals Aero & Defense REGAL Public Finance Software Capital Goods REGAL Aero & Defense Food & Beverage Energy Technology – Japan Infrastructure – Australia Investment Banking – Sector, Product and Regional Expansion Since the beginning of fiscal 2
Slide 20: Investment Banking – Performance Update
Investment Banking Net Revenues(1) Investment Banking – Performance Update Note: Industry data sourced from Dealogic. As reported in Jefferies Group public filings. In the first quarter of 2018, we made changes to the presentation of our “Revenues by Source” to better align the manner in which we de
Slide 21: Jefferies M&A Franchise Momentum
Jefferies M&A Franchise Momentum $1 Billion+ Completed M&A Transactions Advised by Jefferies Average M&A Deal Size ($ Millions) FY 2015 681 FY 2016 727 FY 2017 831 FY 2018 964 LTM Q3 2019 1,114 Reported Advisory Revenue ($ Millions) Market Share Rank Investment Bank Market Share ∆ From FY 2018 1 Gol
Slide 22: Technology Investment Banking Momentum
Over the last three years, we have significantly increased the size of our Technology team, with a substantial build out of our West Coast Technology practice and subsequent expansion of our East Coast team and our team in Asia Over the same time period, our Technology Investment Banking revenues ha
Slide 23: European Investment Banking Momentum
Notable $1 Billion+ European M&A Transactions in FY 2019 European Investment Banking Record results for European Investment Banking for the last 12 months ended August 31, 2019 Nine months ended August 31, 2019 revenues increased approximately 40% compared to the same period in 2018 Driven by record
Slide 24: Jefferies Finance
(1) Source: Refinitiv LPC. Last twelve months as of August 31, 2019. Jefferies Finance (“JFIN”), our corporate lending joint venture with Massachusetts Mutual Life Insurance Company, continues to grow steadily and prudently Established in 2004, JFIN has demonstrated growth and resilience across mult
Slide 25: Investment Banking – Strategic Priorities
Continue to increase the productivity of our sector MDs Capitalize on significant revenue opportunities from recently entered fee pools and from increased coverage footprint across sectors, sponsors, regions and products Monetize the large number of M&A and ECM opportunities embedded in our incumben
Slide 26: Equities
Equities Jefferies
Slide 27: Equities – Overview
Equities – Overview Jefferies is a leading global institutional equities franchise Sales and trading across North America, EMEA and Asia Pacific, with major trading hubs in New York, London, Hong Kong, and Tokyo 300+ research professionals covering 2,000+ companies (2,800+ including co-branded partn
Slide 28: Equities – Performance and Market Share
Equities – Performance and Market Share Note: Global Cash and Options Market Share sourced from Third Party Market Survey. For Global Cash and Options, 2013 reflects Gross methodology versus 2019 which reflects Net methodology (CSA) due to change in survey. Cash reflects High Touch and Electronic Tr
Slide 29: Equities – Revenue Growth and Diversification Strategy
Equities – Our Revenue Growth and Diversification Strategy ~75% ~25% ~67% ~33% ~35% Revenue Growth in our S&T Business, Driven by Global and Product Diversification International ~80%+ Revenue Growth Since 2013 Americas ~20%+ Revenue Growth Since 2013 Continued Double-Digit Growth in 2019 YTD Q3’19
Slide 30: Equities – Our Opportunity in Asia-Pacific
Equities – Our Opportunity in Asia-Pacific The Asia-Pacific market represents a significant opportunity for our Global Equities franchise to increase market share, improve our competitive positioning and grow revenues We are well positioned to continue benefiting from industry consolidation and mark
Slide 31: Equities – Growth Strategy and Focus Areas
Equities – Our Growth Strategy and Focus Areas Select Focus Areas across the Equities Franchise High Touch Cash Non High-Touch Cash Incremental Opportunity Jefferies Maturity Existing New European Event Hired European Event Driven Strategies team; complements U.S. Team Centralized Risk Book Focus on
Slide 32: Equities – Strategic Priorities
Equities – Strategic Priorities ROE Grow non-cash businesses and focus on new product areas Continue digitalization and electronification of advisory and execution platforms, resulting in a leaner, quant-enabled platform Capitalize on opportunities driven by competitor consolidation and dislocation
Slide 33: Fixed Income
Fixed Income Jefferies
Slide 34: Fixed Income – Overview
Fixed Income – Overview Hires made at leadership level since 1/1/18. Jefferies serves clients across all major cash products in the U.S., Europe and Asia 421 sales, trading, capital markets and strategy professionals globally Primary Dealer or equivalent in U.S., UK, Germany, Netherlands, Portugal a
Slide 35: Fixed Income – Positioned and Focused
Fixed Income – Positioned and Focused Note: As reported in Jefferies Group public filings. LTM Q3’19 assumes YTD 2019 quarterly revenues as reported whereas Q4 is prior year period (Q4’18) reported revenues. Period End Fixed Income Balance Sheet. Period End Headcount with Q1’15 adjusted to include F
Slide 36: Fixed Income – Strong Client Franchise
Leveraged Finance #6 Dealer for Most Helpful Traders in U.S. Distressed Debt #9 Dealer for Most Helpful Traders in U.S. High Yield Bonds #9 Market Share for Secondary U.S. High Yield Cash Bonds Fixed Income – Strong Client Franchise Notes: Rankings sourced from Greenwich Survey 2019 unless otherwise
Slide 37: Fixed Income – Strategic Priorities
Client-Partner Culture Quality share vs. market share Building deeper, long-term partnerships with targeted clients Global Alignment Extend our core strengths into Europe: High Yield and Distressed Investment Grade Global Structured Solutions Foreign Exchange CLOs Resource Utilization Highly product
Slide 38: Leucadia Asset Management
Leucadia Asset Management 36
Slide 39: Leucadia Asset Management – Overview
Diversified alternative asset management platform – supporting and developing focused funds and managed accounts managed by distinct management teams Includes all asset management activities within Jefferies Financial Group, including investments and strategic relationships where we participate in a
Slide 40: Leucadia Asset Management – Recent Developments
January 2019: Folger Hill and Schonfeld Fundamental Equity combination Closed transaction combining Folger Hill with Schonfeld’s Fundamental Equity business The combination creates a global multi-manager platform with strong prospects for growth Upside through revenue share in the management company
Slide 41: Leucadia Asset Management – Recent Developments (Continued)
October 2019: Equity investment in Monashee Investment Management Equity and debt capital markets investment strategy with a proven 8-year track record managing over $1 billion of AUM Led by Jerry Coughlan and Tom Wynn, with a team of 12 senior professionals and offices in Boston and London Fundrais
Slide 42: Leucadia Asset Management – Platforms
Asset Class NAV(1) Founded Description Multi-Manager Multi $2.4 1978 Multi-strategy asset manager with 40 year track record Equities $1.1 2014 Discretionary long/short equity hedge fund platform Combination of Folger Hill with Schonfeld’s Fundamental Equity business Multi $1.3 2006 Systematic strate
Slide 43: Leucadia Asset Management – Strategic Priorities
Grow fee-generating third party assets; prospect of long-term stable cash flows Continue to add new platforms Earn reasonable risk-adjusted return on seed capital; recycle capital to continue to form new platforms Manage cost and mitigate risk Leverage Jefferies Group back office to manage launch co
Slide 44: Merchant Banking
Merchant Banking Jefferies
Slide 45: National Beef – Overview
National Beef – Overview Overview National Beef is the fourth largest beef processor in the U.S., processing ~3 million fed cattle per year (~14% U.S. market share) 3 processing plants strategically located in KS and IA KS plants consistently ranked among top 3 domestic plants producing Certified An
Slide 46: Idaho Timber – Overview
Idaho Timber – Overview Overview Manufacturer and distributor of wood products Complementary Remanufacturing and Sawmill segments 7 plants and 3 sawmills located in 7 states ~1.0 billion board feet of capacity Remanufacturing segment Purchase low value dimension lumber and remanufacture to add value
Slide 47: Vitesse Energy Finance – Overview
Vitesse Energy Finance – Overview Strategic Priorities Continue to participate in lower risk infill horizontal development drilling in the core areas of the Bakken Oil field that produce 35%+ drill bit level IRRs In April 2018 Vitesse made a highly accretive acquisition of additional Bakken non-oper
Slide 48: HomeFed – Overview
HomeFed – Overview Revenue Strategic Priorities Optimize assets to focus on expediting development programs and maximizing revenue and return over the coming years Leverage HomeFed’s experienced team and skill set to ramp up the pace and number of development projects Explore partnership opportuniti
Slide 49: Linkem – Overview
Revenue Linkem – Overview Overview Leading fixed wireless broadband provider in Italy Core consumer offering provides pre- and post-paid residential customers unlimited broadband services for €25/month Linkem also sells its services through wholesale and strategic partners including Telecom Italia,
Slide 50: Q & A – IRQuestions@Jefferies.com
Q & A – IRQuestions@Jefferies.com
Slide 51: Appendix
Appendix Jefferies
Slide 52: Jefferies Financial Group – Pro Forma Book Value
Jefferies Financial Group – Pro Forma Book Value Note: Proforma book value is a non-GAAP financial measure that begins with information prepared in accordance with U.S. GAAP and then adjusted to include pro forma adjustments. Management believes that the pro forma amounts are common metrics used by
Slide 53: Jefferies Financial Group – NAV GAAP Reconciliation
Jefferies Financial Group – NAV GAAP Reconciliation Note: Estimated fair value and proforma fair value are non-GAAP financial measures that begin with information prepared in accordance with U.S. GAAP and then are adjusted to include fair value adjustments or pro forma adjustments. Management believ
Slide 54: Tangible Equity and Tangible Asset GAAP Reconciliation
Jefferies Financial Group – Tangible Equity GAAP Reconciliation Jefferies Financial Group – Tangible Asset GAAP Reconciliation Note: Tangible equity and tangible assets are non-GAAP financial measures that begin with information prepared in accordance with U.S. GAAP and then adjusted to remove intan
Slide 55: National Beef and Idaho Timber – Reconciliation to EBITDA
National Beef – Reconciliation of Pre-Tax Income to EBITDA (a Non-GAAP measure) Idaho Timber – Reconciliation of Pre-Tax Income to EBITDA (a Non-GAAP measure) Note: Idaho Timber EBITDA represents pre-tax income exclusive of depreciation and amortization expenses and interest income, which is a commo
Slide 56: Vitesse – Reconciliation to Adjusted EBITDA
Vitesse – Reconciliation of Pre-Tax Income to Adjusted EBITDA (a Non-GAAP measure) Note: Vitesse Adjusted EBITDA represents pre-tax income exclusive of depletion, depreciation, amortization and accretion expenses, interest expense, unrealized gains on commodity derivative instruments and other non-r
Slide 57: Linkem – Reconciliation to Adjusted EBITDA
Linkem – Reconciliation of Pre-tax Loss to Adjusted EBITDA (a Non-GAAP measure) Note: Linkem is not consolidated by Jefferies Financial Group and is accounted for under the equity method. The above reconciliation is provided for convenience only. Linkem Adjusted EBITDA represents pre-tax loss exclus
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