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Leucadia Q2 Earnings Improve Y/Y on Solid Segmental Results - Analyst Blog

Leucadia National Corporation ( LUK ) posted earnings from continuing operations of 16 cents per share in second-quarter 2014. The bottom line grew 14.3% from 14 cents per share earned in the year-ago quarter.

Revenues

Leucadia generated net revenues of $2,852.1 million, reflecting an improvement of 6.6% over $2,675.7 million recorded in the prior-year quarter. Top-line growth was driven by higher revenues from beef-processing services, commissions, principal transactions, investment banking business and interest income.

The company reports its revenue results under the following heads:

Revenues from the Beef Processing Services segment were $2,009.1 million, expanding 4.6% year over year. As a percentage of net sales, the result was 70.4%.

Investment Banking & Capital Markets - the segment created after the merger of Leucadia with Jefferies in Mar 2013, generated revenues of $689.3 million, accounting for roughly 24.2% of net revenues. Compared with the year-ago quarter, the segmental revenue climbed 5.8% year over year.

Revenues from Other Operations segment, which comprises manufacturing, energy projects, asset management and real estate businesses, escalated 33.3% year over year to $113.8 million. It represented 4% of net revenues. Revenues from the Corporate segment, nearly 1.4% of net revenues, came in at $39.9 million, up from $18.4 million in the year-ago quarter.

Expenses/margins

Leucadia's cost of sales climbed 6.2% year over year and, as a percentage of sales, stood at 71.6% versus 71.8% in the year-ago quarter. Selling, general and other expenses were 6.6% of net revenue, down 70 basis points (bps) year over year. Compensation and benefits amounted to $424.2 million versus $409.4 million recorded in the year-ago quarter.

Operating margin was at 2.5% versus 1.8% in the prior-year quarter.

Balance Sheet

Exiting second-quarter 2014, Leucadia had cash and cash equivalents of $4,186.7 million, up 16.6% from $3,590.5 million at the end of the preceding quarter. Long-term debt increased 5.6% to $8,798.1 million from $8,331.3 million in the previous quarter.

Cash Flow

In first-half 2014, Leucadia used net cash of $1,112.2 million for its operating activities versus $447.5 million generated in the year-ago comparable period. Capital spending on property, equipment and leasehold were $165.8 million, above $54.3 million spent in the year-ago period. Cash dividends paid totaled $46.5 million.

Leucadia currently has a market capitalization of $9.0 billion. Other major players in the diversified operations industry include Federal Signal Corp. ( FSS ), Noble Group Limited ( NOBGY ) and CLARCOR Inc. ( CLC ). While Federal Signal and Noble Group sport a Zacks Rank #1 (Strong Buy), CLARCOR holds a Zacks Rank #2 (Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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