Jefferies Financial Group Inc. · NYSE:JEF
Jefferies Financial — Leucadia National — Shareholder Meeting (May 2014)
55 slides from Jefferies Financial's shareholder meeting presentation, May 13, 2014
Slide 1: Leucadia National Corporation 2014 Annual Meeting
Leucadia National Corporation 2014 Annual Meeting May 13, 2014
Slide 2: Note on Forward Looking Statements
Note on Forward Looking Statements This document 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
Slide 3: Leucadia Overview
Leucadia Overview As of March 31, 2014: Leucadia National Common Equity: $10.2 billion Jefferies (100%) $5.4 billion Other Businesses and Assets, net $2.7 billion Parent Company Cash & Investments $2.2 Billion Jefferies Finance (50%) (Corporate Lending) National Beef (79%) (Value-added Beef and Leat
Slide 4: Our Strategy
Our Strategy 1. Value Focused 2. Long-Term Over Short-Term 3. Permanent Capital as a Competitive Advantage 4. Opportunistic/Willing to Do the Work and Move Quickly 5. Sometimes Countercyclical 6. Comfortable With Complex Situations 7. Positioned to Uniquely Leverage Jefferies 8. Willing to Partner S
Slide 5: Highly Qualified Independent Directors
Highly Qualified Independent Directors Robert E. Joyal Lead Director Formerly President of Babson Capital Management W. Patrick Campbell Formerly Chairman and CEO of Magex Limited; EVP of Ameritech Corp.; and President and CEO of Columbia TriStar Home Video Linda L. Adamany Former member of BP plc’s
Slide 6: Events Since March 1, 2013
Events Since March 1, 2013 Inmet Mining merger (March 2013): Total consideration of $732 million, including $392 million of cash and $340 million of First Quantum stock (now fully exited) Follow-on investments totaling $107 million in Linkem, increasing fully diluted ownership from 38% to 53% (June,
Slide 7: Focus – Compelling Value in Sectors We Understand
Focus – Compelling Value in Sectors We Understand Financial Services – Jefferies – Berkadia – Asset Management – Specialty Finance Auto Retail – Garcadia Agribusiness – National Beef Project Development – Gasification – Oregon Liquefied Natural Gas Real Estate – HomeFed Energy – Juneau Energy – Vite
Slide 8: Leucadia Current and Historical Investments
Leucadia Current and Historical Investments Consumer National Beef Garcadia Harbinger – Spectrum Brands Crimson Wine Group Pepsi International Bottlers Sperry and Hutchinson Company Energy Juneau Energy Vitesse Energy Leucadia Energy Oregon LNG Harbinger – Exco / HGI JV Keen Energy Services Barbados
Slide 9: National Beef
one 4 National B al Beef. ‘h
Slide 10: National Beef Company Overview
Overview National Beef Company Overview 4th largest beef processing company in the U.S. – Processing plants strategically located in Liberal and Dodge City, KS: 3 value-added further processing plants in Kansas City, MO; Moultrie, GA and Hummels Wharf, PA – Compete with Tyson, Cargill, JBS and numer
Slide 11: Strategic Priorities National Beef
Strategic Priorities National Beef Focus on additional value-added production – Currently operate 3 further processing plants with significant capacity available for growth – Ongoing dialogue with retailer and food service providers regarding case-ready, portion-controlled and ready-to-cook product
Slide 12: Harbinger Group Inc.
Harbinger Group Inc. 10
Slide 13: Harbinger Group Inc. Company Overview
Overview Harbing Group Inc. Company Overview NYSE-listed diversified holding company (NYSE: HRG) that operates in four business segments: — Consumer Products – Spectrum Brands (NYSE: SPB, ~59% ownership (1)) — Insurance – Fidelity & Guaranty Life (NYSE: FGL, ~80% ownership (1)); FrontStreet Re — Ass
Slide 14: HomeFed Corporation
HOMEFED CORPORATION ps a=
Slide 15: HomeFed Corporation Company Overview
Overview HomeFed Corporation Company Overview Developer/owner of residential and mixed-use real estate projects in California, Maine, New York, Virginia, South Carolina and Florida HomeFed also assesses the acquisition of new real estate projects outside of its core geographical areas Current Proper
Slide 16: Strategic Priorities HomeFed Corporation
Strategic Priorities Homefed Corporation Pursue further planning, entitlement & approval activity — Otay Land – up to 6,050 residential lots and 1.8 million square feet of commercial — Fanita Ranch (2,600 Acres) — Pacho (2,369 Acres) Commence sales of Maine oceanfront lots Begin construction and lot
Slide 17: Berkadia
Berkadia® The Indutry of One® 15
Slide 18: Berkadia Company Overview
Overview BERKADIA® THE INDUSTRY OF ONE® Company Overview Business Activities: — Loan originations — Investment sales — Bridge lending — Master / primary servicing 2nd largest FHLMC commercial real estate lender 5th largest FNMA commercial real estate lender 3rd largest servicer of commercial real es
Slide 19: Strategic Priorities Berkadia
Strategic Priorities Berkadia® The Industry of One® Grow commercial real estate customer base — Continue to build product suite and capabilities Increase production — Add additional mortgage bankers and investment sales professionals — Grow market share through the maturity wave “Servicer’s Servicer
Slide 20: Garcadia
( Mm GARCADIA ‘h
Slide 21: Garcadia Company Overview
Overview Garcadia Company Overview A top 15 U.S. dealership group — 22 dealerships in California, Texas and Iowa 11 domestic brands, 11 foreign — 2,000 employees Acquisition strategy: — Build geographic clusters in medium to large markets — Target medium to high volume stores — Focus on profitable,
Slide 22: Strategic Priorities Garcadia
Strategic Priorities Garcadia Create lifetime customers — Deliver an unsurpassed customer experience — Empower employee ‘Champions’ to lead the creation of a better car ownership experience Improve operating efficiency — Exceed market growth in new car sales — Increase used car volume — Grow service
Slide 23: Linkem
Linkem internet revolution 21
Slide 24: Linkem Company Overview
Overview linkem internet revolution Company Overview Fast-growing fixed wireless broadband provider in Italy —127% annualized subscriber growth rate since Leucadia’s initial investment in July 2011 —190,000 subscribers as of 03/31/14 Nationwide network deployment with base stations, fiber exchange p
Slide 25: Strategic Priorities Linkem
Strategic Priorities linkem internet revolution Maintain subscriber growth on the existing footprint until the commercial availability of LTE later this year Test and deploy LTE in late 2014 – LTE base stations will have at least double the capacity of existing base stations Then expand the footprin
Slide 26: Conwed Global Netting Solutions
CONWED® GLOBAL NETTING SOLUTIONS 24
Slide 27: Conwed Company Overview
Overview CONWED GLOBAL NETTING SOLUTIONS Company Overview Headquartered in Minneapolis, MN Leading plastic netting manufacturer Operates 5 manufacturing facilities located on 2 continents and has a global distribution network Facilities located in Minnesota, Georgia, Illinois, Virginia and Genk, Bel
Slide 28: Strategic Priorities Conwed
Strategic Priorities CONWED GLOBAL NETTING SOLUTIONS Drive annual organic growth Continued co-development with customers New products, markets and applications for Conwed’s core technology Geographic market expansion Minimize lost business Relentlessly improve customer service levels Develop Filtrex
Slide 29: Idaho Timber
@ IDAHO TIMBER ‘h
Slide 30: Idaho Timber Company Overview
Overview IDAHO TIMBER Company Overview Manufacturer and distributer of wood products including: Remanufacturing dimension lumber Remanufacturing, bundling and bar coding of home center boards Pine dimension lumber and pine decking 7 plants and 3 sawmills located in Arkansas, Florida, Idaho, Louisian
Slide 31: Strategic Priorities Idaho Timber
Strategic Priorities IDAHO TIMBER Primary Mill: Develop production capabilities and market to achieve consistent production results on a full one-shift capacity basis Boards: Return to consistent profitability by 2015 Remanufacturing: Drive production efficiencies by increasing shipments over 2013 B
Slide 32: Vitesse Energy
Vitesse Energy 30
Slide 33: Vitesse Energy – Overview
Vitesse Energy – Overview Overview Denver-based oil and gas company led by Bob Gerrity, CEO, and Brian Cree, CFO Gerrity is the former CEO of Gerrity Oil & Gas (NYSE: GOG), a successful company in the Wattenberg Field sold to Patina Oil & Gas GOG was a leader in developing the field through a manufa
Slide 34: Vitesse Energy – Strategic Priorities
Vitesse Energy – Strategic Priorities Selectively build scale by making additional investments throughout the Bakken Focus on acquisitions in the core that possess strong economics verified by offset drilling and production results Evaluate prudent oil hedging program 32
Slide 35: Juneau Energy
Juneau Energy 33
Slide 36: Juneau Energy – Overview
Juneau Energy – Overview Overview Houston-based oil and gas company led by Brad Juneau, CEO, and Jeff Edgar, President Juneau is the former Head of Exploration at Zilkha Energy and later at Contango/Juneau Exploration (grew both companies to +$1bn) Edgar, formerly Vice President of Rock Oil, is a re
Slide 37: Juneau Energy – Strategic Priorities
Juneau Energy – Strategic Priorities Focus on proven resource plays possessing lower development risks with strong targeted single well returns Selectively scale existing investments to build larger footprint Identify areas that leverage team’s experience and are complementary to existing assets 35
Slide 38: Specialty Finance
Specialty Finance 36
Slide 39: Specialty Finance – Overview
Specialty Finance – Overview Overview Currently two non-bank financing companies Foursight Capital – auto loan originator and servicer Chrome Capital – lessor of used Harley-Davidson motorcycles Foursight Capital is the successor to Franklin Capital’s auto finance business, which was liquidated in e
Slide 40: Specialty Finance – Strategy
Specialty Finance – Strategy Leucadia’s long experience investing through cycles provides deep knowledge base i.e., AmeriCredit, Finova, American Investment Bank and City Finance Company There are niches in specialty finance where lessons learned from the financial crisis and “big data” innovations
Slide 41: Leucadia Projects
Leucadia Projects Leucadia Energy Potential development of gasification projects — Lake Charles Clean Energy – Lake Charles, LA Leucadia Energy, LLC — Mississippi Clean Energy – Jackson County, MS — Chicago Clean Energy – Chicago, IL Oregon LNG Leasehold interest and pursuing permits for onshore LNG
Slide 42: Jefferies
Jefferies 40
Slide 43: A Full-Service Investment Banking Firm
A Full-Service Investment Banking Firm Jefferies Investment Banking Equities Fixed Income Jefferies Bache Consumer Energy Equity Capital Markets Cash Equities Electronic Trading Investment Grade Leveraged Credit Listed Futures Base Metals Financials Healthcare Leveraged Finance Derivatives Prime Bro
Slide 44: Global Footprint
Global Footprint Jefferies Over 3,800 employees in over 30 cities worldwide London (European Headquarters) New York (Global Headquarters) (1) Hong Kong (Asian Headquarters) (1) (1) (1) (1) (1) Jefferies distributes on a co-branded basis research issued by third-parties headquartered in the identifie
Slide 45: Understanding Jefferies
Understanding Jefferies What we are: We are focused: We are prudent and targeted with our balance sheet and capital We are nimble: As we have proven, we actively manage our balance sheet and market exposures on a granular level We are hands-on: Decision making gets to senior management quickly We ar
Slide 46: Net Revenues & Net Income Since 1990
Net Revenues & Net Income Since 1990 ($ Millions) Jefferies Net Revenues Predecessor Successor $3,500 3,040 $3,000 $2,500 2,192 $2,000 $1,500 1,205 $1,000 617 $500 144 365 $0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 LTM Q1 201
Slide 47: Investment Banking Revenues Since 1990
Investment Banking Revenues Since 1990 Jefferies ($ Millions) Net Revenues Predecessor Successor $1,500 1,428 $1,200 $900 890 $600 495 $300 72 91 9 $0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Note: All results as reported in Jefferies’ public filings. 45
Slide 48: Jefferies LTM and Q1 2014 Performance
Earnings Update Jefferies ($ Millions) LTM Ending 02/28/14 performance: — Net Revenues: $3,040 million — Pre-Tax Earnings: $447 million — Net Earnings: $274 million Q1 2014 performance: — Net Revenues: $899 million — Pre-Tax Earnings: $182 million — Net Earnings: $112 million Revenues by Source – LT
Slide 49: Strategic Priorities Jefferies
Strategic Priorities Jefferies Jefferies continues to gain market share and deliver consistent profitability — Investment Banking revenue growth underlines the quality and increasing momentum of Jefferies’ platform — Growth of Jefferies Finance platform — Solid growth in Equities revenues — Durable
Slide 50: Appendix
Appendix 48
Slide 51: Long-Term Capital Raised Since January 1, 2013
Leucadia, its Subsidiaries and its Affiliates – Long-Term Capital Raised Since January 1, 2013 Long-Term Capital Raised 01/01/13 - 05/12/14 Leucadia 5.50% Senior Notes due 2023 750,000,000 Leucadia 6.625% Senior Notes due 2043 250,000,000 Jefferies 5.125% Senior Notes due 2023 600,000,000 Jefferies
Slide 52: National Beef – GAAP Reconciliation
National Beef – GAAP Reconciliation National Beef® FYE August, FYE Dec., ($ Millions) 2009 2010 2011 2012 2013 Pre-Tax Income (GAAP) $145.1 $249.0 $261.6 $59.0 $(42.4) Interest Expense / (Income), net 23.2 14.7 11.7 12.4 12.3 Depreciation & Amortization 44.4 49.6 51.2 83.1 88.5 Impairment of Long-Li
Slide 53: Harbinger – Consumer GAAP Reconciliation
Harbinger – Consumer GAAP Reconciliation National Beef Harbinger Group Inc. FYE September 30, ($ Millions) 2011 2012 2013 Consumer - Pro Forma Net Sales Reconciliation: Reported Net Sales $3,187 $3,252 $4,086 Hardware and Home Improvement Group Acquisition (1) - 974 192 Pro Forma Net Sales $3,187 $4
Slide 54: Harbinger – Insurance and Energy GAAP Reconciliations
Harbinger – Insurance and Energy GAAP Reconciliations Harbinger Group Inc. FYE September 30, ($ Millions) 2011 2012 2013 Insurance - Adjusted Operating Income Reconciliation: Reported Operating Income $(42) $160 $523 Effect of Investment Gains, net of offsets (1) (132) (248) Effect of Change in FIA
Slide 55: Leucadia National Corporation 2014 Annual Meeting
Leucadia National Corporation 2014 Annual Meeting May 13, 2014