Leucadia National Corporation (NYSE:LUK) today announced its
financial results for the three and six month periods ended June
30, 2016. Income before income taxes and net income attributable to
Leucadia National Corporation common shareholders were $139.5
million and $57.3 million, or $0.15 per diluted share,
respectively, for the three month period. The unusually high
effective tax rate of 49% for the three month period reflects the
true-up of year-to-date tax expense to our projected full-year
effective tax rates at June 30, 2016, which were impacted during
the quarter by changes in the geographic mix of earnings among
jurisdictions with differing tax rates. In light of Leucadia's U.S.
federal NOLs, our tax expense is substantially non-cash. Income
(loss) before income taxes and net income (loss) attributable to
Leucadia National Corporation common shareholders were ($162.5
million) and ($165.6 million), or ($0.44) per diluted share,
respectively, for the six month period ended June 30, 2016.
Rich Handler, CEO of Leucadia, and Brian Friedman, President of
Leucadia, said: "Leucadia's second quarter 2016 results reflect
more normal quarterly results for Jefferies, as previously
reported, and strong results for National Beef, as positive
momentum continued throughout the quarter and into the third
quarter. The upturn at National Beef is substantial and we believe
will be sustained for the foreseeable future. These good results
were offset by continued volatility in our fair value adjustments,
including an unrealized $47.9 million reduction to the fair value
of our FXCM investment (reducing our cumulative gains to $390.3
million)."
During the quarter, Leucadia repurchased a total of 3.0 million
common shares at an average price of $16.63 per share. 17.5 million
shares remain authorized for repurchase.
Financial Services Businesses
As previously reported, Jefferies second quarter results
reflected improved results in Equities and Fixed Income, although
new issue capital markets activity remained somewhat muted.
We are pleased with our investment in FXCM, a leading online
provider of foreign exchange trading services. Through the end of
the second quarter, our net investment of $279.0 million has
yielded us so far cumulative cash of $160.9 million, and the
remaining outstanding principal balance of the loan is $192.5
million. We anticipate full repayment of our loan during 2017, as
FXCM continues its sale of noncore assets and generates operating
cash flow. The previously announced amendments to the agreements
are expected to be completed during the third quarter.
Work done to integrate Berkadia’s debt origination and
investment sales capabilities over the last several years drove
solid results for the first half of the year - new financing
originated for clients grew 9% to $8.3 billion and investment sales
volume grew at 27% to $3.4 billion. We expect to see continued
momentum at Berkadia as we enter the heart of the commercial real
estate re-finance wave over the next several years. We recorded
income from associated companies related to Berkadia of $20.4
million and $33.5 million for the three and six month periods ended
June 30, 2016. During the second quarter, we received cash
distributions from Berkadia of $35.3 million, bringing our total
distributions received for the first half of 2016 to $40.7
million.
HomeFed took important steps this quarter to begin the
realization of value associated with Otay Ranch. In April, HomeFed
partnered with three builders to develop a 450 acre community
planned for 948 homes in the Otay Ranch General Plan Area of Chula
Vista, California. With initial contributions of cash from the
builders and land from HomeFed, the builders have taken the
responsibility for the construction and marketing of the homes,
while HomeFed will complete the community infrastructure. Profits
from home sales will be shared. In anticipation of higher future
taxable income, HomeFed released a valuation allowance of $31.8
million against its deferred tax assets. We recorded income from
associated companies related to HomeFed of $23.6 million during the
second quarter.
Merchant Banking Businesses
National Beef had a terrific second quarter, continuing the
momentum from earlier this year. Pretax income of $62.9 million for
the second quarter and $84.3 million year-to-date reflects a more
balanced dynamic between supply of available cattle and demand for
beef.
The stock price of HRG Group decreased slightly during the
second quarter, resulting in an unrealized mark-to-market decrease
in value of $9.3 million and bringing the year-to-date net increase
in value to $7.9 million. On July 5, HRG announced its wholly-owned
subsidiary, HGI energy, has entered into an agreement to sell 100%
of its interest in its oil and gas subsidiary, Compass, for $145
million, and expects the transaction to close in August.
Garcadia’s long term focus on growing the fixed operations side
of its business continued to pay dividends in the first half with
same store gross revenues generated by the service and parts
businesses up 7.5%. During the quarter we acquired one additional
dealership, West Coast Toyota in Long Beach, CA, bringing our total
dealership count to 28. We received cash distributions from
Garcadia of $25.7 million during the first half of the year.
Linkem, our growing fixed wireless broadband provider in Italy,
ended the quarter with 355,282 customers, up 14% from year-end.
Linkem continues to focus on expanding the network footprint and
increasing network capacity, with 83% of its 1,539 base stations
currently LTE enabled. With service comparable to fiber, and
significant capital expenditure and speed of deployment advantages,
Linkem is poised to become an integral component of Italy’s
broadband solution.
Conwed, our plastics manufacturing company, completed another
solid quarter, with strong volumes in Conwed’s legacy business,
particularly in the erosion control segment. Conwed’s total pretax
income, compared to last year, grew 21% in the second quarter, and
45% year-to-date, due to a favorable product mix and better resin
prices.
Idaho Timber showed improvement in pretax income as a result of
attractive supply purchasing opportunities generated by excess
Canadian lumber, the continued slow rebound in housing construction
and increased volumes to its largest home center customer.
We have an effective 35% interest in the Golden Queen Mining
Company, which owns the Soledad Mountain gold and silver project in
Kern County, California. Golden Queen commenced gold and silver
production in March. We are pleased with the commissioning
progress, and mining and processing activities are now operating 7
days per week. With the processing plant running at-or-above
designed throughput levels, the focus is to raise the run-time per
day to improve results.
Juneau Energy drills for, develops and produces oil and gas, and
owns acreage and production in Oklahoma and East Texas. Drilling
was on hold during the second quarter as the company studied and
evaluated its development opportunities and awaited improved oil
and gas prices. Juneau is extending the terms of many core leases
at modest renewal prices and in other areas it is rationalizing
acreage holdings where it does not expect to drill in the near
term. Juneau anticipates that expenses will continue to exceed
revenues until drilling restarts and lease renewal determinations
have been finalized.
Vitesse Energy owns non-operated oil and gas assets within the
core of the Bakken Field in North Dakota. It owns over 21,000 net
acres and associated non-operated oil and gas production from over
1,200 gross producing wells, primarily located in Williams,
McKenzie and Mountrail counties. During the second quarter, Vitesse
production volumes increased as operators continued to drill and
complete wells in the core areas of the Bakken shale.
* * * *
For more information on the Company’s results of operations for
the three and six months ended June 30, 2016, please see the
Company’s Form 10-Q, which will be filed with the Securities and
Exchange Commission today.
This press release contains “forward looking statements” within
the meaning of the safe harbor provisions of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange
Act of 1934. Forward looking statements include statements about
our future and statements that are not historical facts. These
forward looking statements are usually preceded by the words
“should,” “expect,” “intend,” “may,” “will,” or similar
expressions. Forward looking statements may contain expectations
regarding revenues, earnings, operations, and other results, and
may include statements of future performance, plans, and
objectives. Forward looking statements also include statements
pertaining to our strategies for future development of our business
and products. Forward looking statements represent only our belief
regarding future events, many of which by their nature are
inherently uncertain. It is possible that the actual results may
differ, possibly materially, from the anticipated results indicated
in these forward looking statements. Information regarding
important factors, including Risk Factors that could cause actual
results to differ, perhaps materially, from those in our forward
looking statements is contained in reports we file with the SEC.
You should read and interpret any forward looking statement
together with reports we file with the SEC.
SUMMARY FOR LEUCADIA
NATIONAL CORPORATION AND SUBSIDIARIES(In thousands, except
per share amounts)(Unaudited)
For the Three Months EndedJune 30,
For the Six Months EndedJune 30,
2016 2015 2016 2015 Net revenues $ 2,625,358
$ 2,839,463 $ 4,640,464 $ 6,024,146
Net realized securities gains $ 7,414 $ 9,093
$ 8,142 $ 24,182 Income (loss) before income
taxes and income related to associated companies $ 87,572 $ (29,344
) $ (234,443 ) $ 517,312 Income related to associated
companies 51,890 29,807 71,942 70,258
Income (loss) before income taxes 139,462 463 (162,501 )
587,570 Income tax provision (benefit) 68,850 (14,571
) (14,511 ) 198,107 Net income (loss) 70,612 15,034
(147,990 ) 389,463 Net loss attributable to the
noncontrolling interests 760 356 1,812 590 Net (income) loss
attributable to the redeemable noncontrolling interests (13,068 )
2,031 (17,382 ) 9,143 Preferred stock dividends (1,015 )
(1,015 ) (2,031 ) (2,031 ) Net income (loss) attributable to
Leucadia National Corporation common shareholders $ 57,289 $
16,406 $ (165,591 ) $ 397,165 Basic earnings
(loss) per common share attributable to Leucadia National
Corporation common shareholders: Net income (loss) $ 0.15 $
0.04 $ (0.44 ) $ 1.04 Number of shares in
calculation 372,556 373,654 372,448 373,611
Diluted earnings (loss) per common share attributable
to Leucadia National Corporation common shareholders: Net income
(loss) $ 0.15 $ 0.04 $ (0.44 ) $ 1.04
Number of shares in calculation 372,556 373,662
372,448 377,783
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version on businesswire.com: http://www.businesswire.com/news/home/20160803006668/en/
For Leucadia National Corporation:Laura Ulbrandt,
212-460-1900
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