LUK's 3Q Plunges, Misses Estimate

Leucadia National Corporation (LUK - Analyst Report) reported its financial results for the third quarter on November 8. Results were weak compared with the year-earlier quarter with the company reporting a net loss from continuing operations of $291.7 million, or $1.19 per share. This compares with a net income of $263.2 million, or $1.07 per share in the third quarter of 2010 as well as the Zacks Consensus Estimate of 70 cents.

Revenue

In the third quarter 2011, revenue jumped 27.0% year over year to $236.1 million from $185.9 million in the year-ago comparable quarter.

In the reported quarter, revenue from the Manufacturing segment was $63.4 million, up 3.5% year over year and accounted for 26.9% of total revenue. Oil and Gas Drilling segment accounted for 15.4% of revenue and totaled $36.3 million.

Revenue generated from the Gaming Entertainment Operations was roughly 12.1% of total revenue, and decreased 7.9% to $28.6 million, while revenue of $3.1 million from the Domestic Real Estate segment accounted for 1.3% of total revenue.

Revenue from the Medical Product Development segment was $0.1 million. Proceeds from Other operations were $18.9 million, up from $14.3 million in the third quarter of 2010 and accounted for about 8.0% of total revenue, while the Corporate segment revenue of $85.7 million accounted for 36.3% of revenue.

Expenses/Margins

Expenses were $217.2 million in the quarter, down from $244.6 million in the year-ago quarter. In relation to revenue, expenses dipped to 92% from 131.6% in the earlier year quarter.

Balance Sheet

Exiting the third quarter, Leucadia’s cash and cash equivalents plummeted 43.2% sequentially to $306.3 million while its long-term debt was flat at $1,471.3 million compared with $1,471.2 million in the previous quarter.

Cash Flow

Cash flow from operating activities was a net inflow of $21.0 million in the quarter compared with a net inflow of $103.5 million in the year-ago quarter. Spending on property, equipment and leasehold improvements in the quarter was $9.6 million versus $7.5 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 - Snapshot Report) and The Blackstone Group (BX - Snapshot Report).

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