LUK's 3Q Results Improve, Lags Est.

Leucadia National Corporation ( LUK - Analyst Report ) posted impressive financial results in the third quarter 2012. Earnings per share in the quarter were 44 cents as against a loss per share of $1.20 in the third quarter 2011 and a loss of 81 cents in the previous quarter.

Results, however, lagged behind the Zacks Consensus Estimate of earnings of $2.03 per share.

Revenue

In the reported quarter, revenue reached $2.19 billion, compared with $199.8 million in the year-ago quarter. The massive jump was attributable to addition of revenue contribution from National Beef Packaging Company, LLC, in which Leucadia acquired a controlling interest in December 2011.

During the quarter, revenue from the Beef Processing Services segment accounted for 87.3% of total revenue and settled at roughly $1.9 billion. Revenue from the Manufacturing segment was approximately $66.7 million, up 5.2% year over year and accounted for about 3.0% of total revenue.

Revenue generated from the Gaming Entertainment Operations segment was roughly 1.4% of total revenue, and stood at $30.3 million, while revenue of $3.5 million from the Domestic Real Estate segment accounted for 0.16% of total revenue.

Revenue from the Medical Product Development segment was $81 thousand compared with $105 thousand in the year-ago quarter. Proceeds from Other operations were $18.7 million, up from $18.9 million in the year-ago quarter and accounted for about 0.9% of total revenue, while the Corporate segment revenue of $158.9 million accounted for about 7.3% of total revenue.

Expenses/Margins

Expenses in the quarter increased from a mere $183.0 million to $2.05 billion in the third quarter 2012. The massive increase stems from $1.83 billion cost of sale related to the company’s beef processing services. In relation to revenue, expenses represented 93.5% compared with 91.6% in the year-ago quarter.

Balance Sheet

Exiting the third quarter, Leucadia’s cash and cash equivalents improved drastically to $772.1 million compared with $186.7 million in the previous quarter. Debt repayments resulted in a 33.5% sequential decline in long-term debt balance to $911.8 million.

Cash Flow

Cash flow from operating activities in the third quarter 2012 was roughly $199.9 million compared with $21.0 million in the year-ago comparable quarter. Spending on property, equipment and leasehold improvements came in at $18.3 million versus $9.6 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 - Snapshot Report ) and The Blackstone Group ( BX - Analyst Report ) .