Leucadia National Corporation’s (LUK) financial results in the second quarter 2012 were weak as the company reported a loss per share of 81 cents compared with earnings of 75 cents in the year-ago quarter. Results also lagged behind the Zacks Consensus Estimate of earnings of 55 cents. Poor results can be attributed to higher expenses in the quarter that more than offset rise in revenue.
For the six months ended June 30, 2012, the company’s earnings came in at $1.18 per share as compared with 80 cents in the comparable quarter of 2011.
Revenue
In the reported quarter, revenue reached $2.1 billion, compared with $753.4 million in the year-ago quarter. The massive jump was attributable to addition of revenue contribution from National Beef Packaging Company, LLC.
Leucadia acquired a controlling interest in National Beef Packing Company, LLC in December 2011 and thus the company added a new segment -‘Beef Processing Services’ to its portfolio.
During the quarter, revenue from the Beef Processing Services segment accounted for 89.4% of total revenue and settled at roughly $1.9 billion. Revenue from the Manufacturing segment was approximately $63.6 million, down 1.7% year over year and accounted for 3.0% of total revenue. The Oil and Gas Drilling segment accounted for about 1.5% of revenue and was $31.9 million.
Revenue generated from the Gaming Entertainment Operationswas roughly 1.4% of total revenue, and stood at $29.6 million, while revenue of $3.4 million from the Domestic Real Estate segment accounted for 0.16% of total revenue.
Revenue from the Medical Product Development segment was $125 thousand compared with $82 thousand in the year-ago quarter. Proceeds from Other operations were $17.7 million, up from $14.6 million in the year-ago quarter and accounted for about 0.83% of total revenue, while the Corporate segment revenue of $81.7 million accounted for about 3.8% of total revenue.
Expenses/Margins
Expenses in the quarter showed a drastic hike from a mere $234.2 million in the second quarter of 2011 to approximately $2.1 billion in the reported quarter. The massive increase stems from $1.8 billion cost of sale related to the company’s beef processing services. In relation to revenue, expenses represented 96.7% compared with 31.1%in the year-ago quarter.
Balance Sheet
Exiting the second quarter, Leucadia’s cash and cash equivalents plummeted 9.1% sequentially to $186.7 million. Debt repayments resulted in a 3.8% sequential decline in long-term debt balance to $$1,370.8 million.
Cash Flow
Cash flow from operating activities in the second quarter 2012 was roughly $105.9 million as compared with $19.7 million in the year-ago comparable quarter. Spending on property, equipment and leasehold improvements came in at $14.2 million versus $17.2 million in the comparable quarter last year.
Leucadia is engaged in manufacturing, telecommunications, oil and gas drilling services, property management and services, gaming entertainment, real estate activities, medical product development operations and various other investment-related activities in the United States. The company faces competition from other companies like Apollo Investment Corporation (AINV) and The Blackstone Group (BX).
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