Zacks_Analysts' Blog : Leucadia Falls Short in 2Q - Analyst Blog

Leucadia National Corporation (LUK) reported its financial results for the second quarter on August 3. In the second quarter, the company generated net income from continuing operations of 74 cents per share, compared with a loss of $1.01 per share in the year-ago quarter. Results were also slightly below the Zacks Consensus Estimate of 76 cents.

Revenue

In the second quarter 2011, revenue jumped 160.5% year over year to $753.4 million from $289.2 million in the year-ago comparable quarter.

In the reported quarter, revenue from the Manufacturing segment was $64.6 million, down 16.2% year over year and accounted for 8.6% of total revenue. Oil and Gas Drilling segment accounted for 4.3% of revenue and totaled $32.1 million.

Revenue generated from the Gaming Entertainment operations was roughly 4.1% of total revenue, and increased 8.7% to $30.5 million, while revenue of $3.4 million from the Domestic Real Estate segment accounted for 0.4% of total revenue.

Revenue from the Medical Product Development segment was $0.1 million. Proceeds from Other operations were $14.6 million, down from $24.1 million in the second quarter of 2010 and accounted for about 1.9% of total revenue, while the Corporate segment revenue of $608.1 million accounted for 80.7% of revenue.

Margins

Expenses were roughly $234.2 million in the quarter, up from $208.9 million in the year-ago quarter. In relation to revenue, expenses dipped to 31.1% from 72.2% in the earlier year. Operating margins more than doubled from 27.8% in the year-ago quarter to 68.9% in the second quarter 2011 on the back of higher revenues and lower expenses as a percentage of revenue.

Balance Sheet

Exiting the second quarter, Leucadia’s cash and cash equivalents increased 71.7% sequentially to $539.1 million while its long-term debt dipped by 2.3% to $1,471.2 million compared with $1,506.2 million in the previous quarter.

Cash Flow

Cash flow from operating activities was a net inflow of $19.7 million in the quarter compared with a net inflow of $14.4 million in the year-ago quarter. Spending on property, equipment and leasehold improvements in the quarter was $17.2 million versus $6.1 million in the comparable quarter of 2010.

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).