Earnings Plummet at Leucadia in 1Q13

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Leucadia National Corporation (LUK) posted its financial results for the first quarter 2013 on May 9, 2013. Net results were weak as earnings per share were $1.08, much below $1.97 reported in the year-ago quarter.

Revenue

Leucadia reported a 10.1% year-over-year decline in consolidated revenue in the first quarter 2013, which came in at $2.1 billion.

The company made some changes to its revenue segments after it completed acquiring Jefferies in Mar 2013. A brief discussion on the segments has been provided below:

Revenue from the Beef Processing Services segment accounted for 83.5% of total revenue and settled at roughly $1.8 billion. Revenue from the Domestic Real Estate segment accounted for 0.2% of total revenue and came in at $4.3 million.

Revenue from the Medical Product Development segment was $101 thousand compared with $74 thousand in the year-ago quarter. Proceeds from Other operations were $114.4 million versus $112.8 million in the year-ago quarter and accounted for about 5.3% of total revenue, while the Corporate segment revenue of $235.8 million accounted for about 11.0% of total revenue.
 
Expenses/Margins

Expenses of Leucadia decreased marginally from $2.03 billion in the year-ago quarter to $2.00 billion in the first quarter 2013. Of the total expenses, cost of sales accounted for 91.1% while selling, general and other expenses represented 4.0%.

In relation to revenue, expenses represented 93.7% compared with 85.1% in the year-ago quarter.

Balance Sheet

Leucadia reported a considerable increase in its cash and cash equivalent balance which reached $3.1 billion exiting the first quarter 2013 versus $146.0 million in the previous quarter. The increase can be attributed to the addition of Jefferies to the company’s portfolio with approximately $3.0 billion in cash. Long-term debt balance was at $7.8 billion compared with $1.4 billion at the end of the previous quarter.

Cash Flow

Leucadia used cash of $163.3 million for its operating activities in the first quarter 2013 as compared with just $42.7 million used in the year-ago quarter. Spending on property, equipment and leasehold improvements increased 11.9% year over year to $20.8 million.

During the quarter, Leucadia paid dividends totaling $23.0 million and repurchased no shares.     

Leucadia is engaged in beef processing, manufacturing, gaming entertainment, real estate activities, medical product development operations and various other investment-related activities in the United States.

Other major players in the industry are China Merchants Holdings (International) Company Limited (CMHHY) and Hutchison Whampoa Ltd. (HUWHY), each with a Zacks Rank #1 (Strong Buy) while Compass Diversified Holdings (CODI) has a Zacks Rank #2 (Buy).
 

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