01—Abstract
Summary
Summary of the 10-K filed November 26, 2019. Cited figures are marked; the original filing is the authoritative source.
Raymond James Financial, Inc. (RJF) reported fiscal 2019 (year ended September 30, 2019) net revenues of $7.74 billiona, up $466 million, or 6%, from $7.27 billion in fiscal 2018.
Pre-tax income was $1.38 billionb, up $64 million, or 5%. Net income was $1.03 billion, up $177 million, or 21%, compared with a prior year that included a $105 million loss related to the Tax Cuts and Jobs Act. Diluted earnings per share were $7.17, reflecting a 25% increase.
Return on equity was 16.2%, compared with 14.4% the prior year. Excluding a $15 millionc loss on the sale of European equities research, sales and trading operations and a $19 million goodwill impairment in its Canadian Capital Markets business, adjusted net income was $1.07 billion and adjusted diluted EPS was $7.40, a 14% increase. Growth was led by higher asset management and related administrative fees, net interest income and investment banking revenues, partially offset by lower brokerage revenues.
Total assets were $38.83 billiond at year-end. Total client assets under administration were $798.4 billion, of which $409.1 billion was in fee-based accounts, and the firm had 8,011 financial advisors. Raymond James repurchased 9.83 million shares for $752 million during the year and returned approximately $945 million to shareholders through dividends and buybacks.
The filing notes that three Federal Reserve rate cuts, including one in October 2019, are expected to negatively affect fiscal 2020 results. The company's RJ Bank segment net revenues rose 16% to $846 million, while Capital Markets net revenues rose 12% to $1.08 billion.
The Private Client Group, the largest segment, generated $5.36 billion in net revenues, up 5%. Brink and Wistar class action complaints regarding Passport Investment Account fees were settled for $15 million, with final court approval granted on October 25, 2019.
02—Key points
Key Highlights
- Net revenues of $7.74 billion, up 6% year over year; pre-tax income of $1.38 billion, up 5%.
- Net income of $1.03 billion, up 21%; diluted EPS of $7.17, up 25%; return on equity of 16.2% versus 14.4% in fiscal 2018.
- Adjusted diluted EPS of $7.40 (non-GAAP), up 14%, excluding a $15 million European equities operations sale loss and a $19 million Canadian Capital Markets goodwill impairment.
- Client assets under administration of $798.4 billion, with $409.1 billion (51.2%) in fee-based accounts; 8,011 financial advisors.
- Returned approximately $945 million to shareholders via dividends and share repurchases; repurchased 9.83 million shares for $752 million.
- RJ Bank total assets of $25.52 billion; net revenues up 16% to $846 million, with net interest margin rising to 3.32% from 3.22%.
- Fed rate cuts in late fiscal 2019 and October 2019 are expected to negatively affect fiscal 2020 results.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2019filed November 26, 2019Financial Statements
FY2019 against FY2018
| Line item | FY2019FY2018 | Change |
|---|---|---|
| Revenue | $8.02B$7.48B | +7.3% |
| Interest Expense | $283.00M$202.00M | +40.1% |
| Net Income | $1.03B$857.00M | +20.7% |
| EPS (Basic) | $4.88$5.89 | −17.1% |
| EPS (Diluted) | $4.78$5.75 | −16.9% |
| Shares Outstanding (Basic) | 211.50M145.30M | +45.6% |
| Shares Outstanding (Diluted) | 216.00M148.80M | +45.2% |
05—Questions
Frequently Asked Questions
How did Raymond James perform financially in fiscal 2019?
Net revenues rose 6% to $7.74 billion and net income rose 21% to $1.03 billion. Diluted EPS was $7.17, and return on equity was 16.2%. Adjusted net income, a non-GAAP measure excluding certain items, was $1.07 billion.
Which business segments drove growth?
The Private Client Group reported net revenues of $5.36 billion, up 5%. Capital Markets rose 12% to $1.08 billion, driven by investment banking. RJ Bank rose 16% to $846 million, and Asset Management rose 6% to $691 million.
How much capital did the company return to shareholders?
Approximately $945 million through dividends and share repurchases. The company repurchased 9.83 million shares for $752 million at an average price of about $76.50, and $750 million remained under the August 2019 authorization.
What risks does the filing highlight for the outlook?
The filing states that three 25-basis-point Federal Reserve rate cuts, two in the fourth quarter of fiscal 2019 and one in October 2019, are expected to negatively affect fiscal 2020 results. It also cites declining equity commissions, pricing pressure in trading, Brexit uncertainty, LIBOR transition, and cybersecurity risks.
Were there any significant legal settlements?
The Brink and Wistar class action complaints, which concerned fees in the Passport Investment Account, were settled in aggregate for $15 million. The District Court entered final approval of the settlement on October 25, 2019.
06—Continue