LUK Posts Impressive 2012 Results

Leucadia National Corporation ( LUK - Analyst Report ) posted its financial results for the fourth quarter and full year 2012 on Feb 25, 2013. Net results were impressive as earnings per share came in at $1.83 in the fourth quarter, compared with 46 cents earned in the year-ago quarter.

In 2012, earnings per share were $3.45, up compared with 5 cents reported in 2011.

Revenue

In 2012, consolidated revenue and other income were $9,193.7 million compared with $1,434.6 million in 2011. The year-over-year increase was primarily due to the inclusion of revenue contribution from National Beef Packaging Company, LLC, in which Leucadia acquired a controlling interest in Dec 2011.

During the year, revenue from the Beef Processing Services segment accounted for 81.4% of total revenue and settled at roughly $7.5 billion. Revenue from the Manufacturing segment was approximately $252.9 million, up 3.2% year over year and accounted for about 2.8% of total revenue.

Revenue generated from the Gaming Entertainment Operations segment was roughly 1.3% of total revenue, and stood at $119.3 million, while revenue of $10.9 million from the Domestic Real Estate segment accounted for 0.12% of total revenue.

Revenue from the Medical Product Development segment was $377 thousand compared with $378 thousand in the year-ago quarter. Proceeds from Other operations were $69.6 million versus $69.0 million in 2011 and accounted for about 0.8% of total revenue, while the Corporate segment revenue of $1,259.6 million accounted for about 13.7% of total revenue.

Expenses/Margins

Expenses increased from a mere $757.2 million in 2011 to $8.2 billion in 2012. The massive increase stems from $7.3 billion cost of sale related to the company’s beef processing services. In relation to revenue, expenses represented 89.5% compared with 52.8% in 2011.

Balance Sheet

Exiting the fourth quarter 2012, Leucadia’s cash and cash equivalents stood at roughly $146.0 million, way below $772.1 million in the previous quarter. Long-term debt balance was at $918.1 million compared with $911.8 million at the end of the third quarter.

Cash Flow

Cash flow from operating activities was roughly $221.9 million compared with just $9.1 million in 2011. Spending on property, equipment and leasehold improvements increased drastically in 2012 and totaled $71.3 million compared with $38.6 million in 2011.

Dividends paid amounted to $61.1 million, while no shares were repurchased during the year. Exiting 2012, the company was left with 25 million shares under its repurchase authorization.

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 ) , Jardine Strategic Holdings Ltd ( JSHLY ) and Koninklijke KPN N.V. ( KKPNF ) , each with a Zacks Rank #1 (Strong Buy).