Icahn Enterprises L.P. Reports First Quarter 2018 Financial Results
- First quarter net income attributable to
Icahn Enterprises of$137 million , or$0.77 per depositary unit - Board approves quarterly distribution of
$1.75 per depositary unit
For the three months ended March 31, 2018 indicative net asset value increased to
On May 2, 2018, the Board of Directors of the general partner of
Caution Concerning Forward-Looking Statements
Results for any interim period are not necessarily indicative of results for any full fiscal period. This release contains certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, many of which are beyond our ability to control or predict. Forward-looking statements may be identified by words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates," "will" or words of similar meaning and include, but are not limited to, statements about the expected future business and financial performance of
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In millions, except per unit amounts) |
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Three Months Ended March 31, | |||||||
2018 | 2017 | ||||||
Revenues: | (Unaudited) | ||||||
Net sales | $ | 4,493 | $ | 4,319 | |||
Other revenues from operations | 420 | 475 | |||||
Net income (loss) from investment activities | 433 | (130 | ) | ||||
Interest and dividend income | 28 | 29 | |||||
Other income (loss), net | 71 | (26 | ) | ||||
5,445 | 4,667 | ||||||
Expenses: | |||||||
Cost of goods sold | 3,856 | 3,688 | |||||
Other expenses from operations | 255 | 254 | |||||
Selling, general and administrative | 656 | 621 | |||||
Restructuring | 2 | 7 | |||||
Impairment | — | 8 | |||||
Interest expense | 197 | 223 | |||||
4,966 | 4,801 | ||||||
Income (loss) before income tax expense | 479 | (134 | ) | ||||
Income tax expense | (56 | ) | (26 | ) | |||
Net income (loss) | 423 | (160 | ) | ||||
Less: net income (loss) attributable to non-controlling interests | 286 | (142 | ) | ||||
Net income (loss) attributable to Icahn Enterprises | $ | 137 | $ | (18 | ) | ||
Net income (loss) attributable to Icahn Enterprises allocable to: | |||||||
Limited partners | $ | 134 | $ | (18 | ) | ||
General partner | 3 | — | |||||
$ | 137 | $ | (18 | ) | |||
Basic income (loss) per LP unit | $ | 0.77 | $ | (0.12 | ) | ||
Basic weighted average LP units outstanding | 174 | 149 | |||||
Diluted income (loss) per LP unit | $ | 0.77 | $ | (0.12 | ) | ||
Diluted weighted average LP units outstanding | 175 | 149 | |||||
Cash distributions declared per LP unit | $ | 1.75 | $ | 1.50 | |||
CONDENSED CONSOLIDATED BALANCE SHEETS (In millions) |
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March 31, 2018 |
December 31, 2017 |
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ASSETS | (Unaudited) | ||||||
Cash and cash equivalents | $ | 1,250 | $ | 1,682 | |||
Cash held at consolidated affiliated partnerships and restricted cash | 643 | 786 | |||||
Investments | 8,364 | 10,369 | |||||
Due from brokers | 1,236 | 506 | |||||
Accounts receivable, net | 1,914 | 1,805 | |||||
Inventories, net | 3,497 | 3,261 | |||||
Property, plant and equipment, net | 9,733 | 9,701 | |||||
Goodwill | 1,280 | 1,275 | |||||
Intangible assets, net | 1,111 | 1,135 | |||||
Other assets | 1,470 | 1,281 | |||||
Total Assets | $ | 30,498 | $ | 31,801 | |||
LIABILITIES AND EQUITY | |||||||
Accounts payable | $ | 2,112 | $ | 2,064 | |||
Accrued expenses and other liabilities | 1,991 | 1,746 | |||||
Deferred tax liability | 962 | 924 | |||||
Unrealized loss on derivative contracts | 972 | 1,275 | |||||
Securities sold, not yet purchased, at fair value | 299 | 1,023 | |||||
Due to brokers | 38 | 1,057 | |||||
Post-retirement benefit liability | 1,161 | 1,159 | |||||
Debt | 11,208 | 11,185 | |||||
Total liabilities | 18,743 | 20,433 | |||||
Equity: | |||||||
Limited partners | 5,182 | 5,341 | |||||
General partner | (237 | ) | (235 | ) | |||
Equity attributable to Icahn Enterprises | 4,945 | 5,106 | |||||
Equity attributable to non-controlling interests | 6,810 | 6,262 | |||||
Total equity | 11,755 | 11,368 | |||||
Total Liabilities and Equity | $ | 30,498 | $ | 31,801 | |||
Use of Non-GAAP Financial Measures
The Company uses certain non-GAAP financial measures in evaluating its performance. These include non-GAAP EBITDA, Adjusted EBITDA, EBIT and Adjusted EBIT. EBITDA represents earnings before interest expense, income tax (benefit) expense and depreciation and amortization. EBIT represents earnings before interest expense and income tax (benefit) expense. We define Adjusted EBITDA and Adjusted EBIT as EBITDA and EBIT, respectively, excluding the effects of impairment, restructuring costs, certain pension plan expenses, OPEB curtailment gains, purchase accounting inventory adjustments, certain share-based compensation, discontinued operations, gains/losses on extinguishment of debt, major scheduled turnaround expenses, FIFO adjustments and unrealized gains/losses on energy segment derivatives and certain other non-operational charges. We present EBITDA, Adjusted EBITDA, EBIT and Adjusted EBIT on a consolidated basis and attributable to
We believe that providing EBITDA, Adjusted EBITDA, EBIT and Adjusted EBIT to investors has economic substance as these measures provide important supplemental information of our performance to investors and permits investors and management to evaluate the core operating performance of our business without regard to interest, taxes and depreciation and amortization and the effects of impairment, restructuring costs, certain pension plan expenses, OPEB curtailment gains, purchase accounting inventory adjustments, certain share-based compensation, discontinued operations, gains/losses on extinguishment of debt, major scheduled turnaround expenses, FIFO adjustments and unrealized gains/losses on energy segment derivatives and certain other non-operational charges. Additionally, we believe this information is frequently used by securities analysts, investors and other interested parties in the evaluation of companies that have issued debt. Management uses, and believes that investors benefit from referring to these non-GAAP financial measures in assessing our operating results, as well as in planning, forecasting and analyzing future periods. Adjusting earnings for these charges allows investors to evaluate our performance from period to period, as well as our peers, without the effects of certain items that may vary depending on accounting methods and the book value of assets. Additionally, EBITDA, Adjusted EBITDA, EBIT and Adjusted EBIT present meaningful measures of performance exclusive of our capital structure and the method by which assets were acquired and financed.
EBITDA, Adjusted EBITDA, EBIT and Adjusted EBIT have limitations as analytical tools, and you should not consider them in isolation, or as substitutes for analysis of our results as reported under generally accepted accounting principles in
- do not reflect our cash expenditures, or future requirements for capital expenditures, or contractual commitments;
- do not reflect changes in, or cash requirements for, our working capital needs; and
- do not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments on our debt.
Although depreciation and amortization are non-cash charges, the assets being depreciated or amortized often will have to be replaced in the future, and EBITDA and Adjusted EBITDA do not reflect any cash requirements for such replacements. Other companies in the industries in which we operate may calculate EBITDA, Adjusted EBITDA, EBIT and Adjusted EBIT differently than we do, limiting their usefulness as comparative measures. In addition, EBITDA, Adjusted EBITDA, EBIT and Adjusted EBIT do not reflect the impact of earnings or charges resulting from matters we consider not to be indicative of our ongoing operations.
EBITDA, Adjusted EBITDA, EBIT and Adjusted EBIT are not measurements of our financial performance under U.S. GAAP and should not be considered as alternatives to net income or any other performance measures derived in accordance with U.S. GAAP or as alternatives to cash flow from operating activities as a measure of our liquidity. Given these limitations, we rely primarily on our U.S. GAAP results and use EBITDA, Adjusted EBITDA, EBIT and Adjusted EBIT only as a supplemental measure of our financial performance.
Use of Indicative Net Asset Value Data
The Company uses indicative net asset value as an additional method for considering the value of the Company’s assets, and we believe that this information can be helpful to investors. Please note, however, that the indicative net asset value does not represent the market price at which the units trade. Accordingly, data regarding indicative net asset value is of limited use and should not be considered in isolation.
The Company's depositary units are not redeemable, which means that investors have no right or ability to obtain from the Company the indicative net asset value of units that they own. Units may be bought and sold on The NASDAQ Global Select Market at prevailing market prices. Those prices may be higher or lower than the indicative net asset value of the units as calculated by management.
See below for more information on how we calculate the Company’s indicative net asset value.
($ in millions) | March 31, 2018 |
December 31, 2017 |
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Market-valued Subsidiaries: | (Unaudited) | ||||||
Holding Company interest in Funds (1) | $ | 3,214 | $ | 3,052 | |||
CVR Energy (2) | 2,152 | 2,651 | |||||
CVR Refining - direct holding (2) | 75 | 95 | |||||
American Railcar Industries (2) | 444 | 494 | |||||
Total market-valued subsidiaries | $ | 5,885 | $ | 6,293 | |||
Other Subsidiaries: | |||||||
Tropicana (3) | $ | 1,510 | $ | 1,439 | |||
Viskase (4) | 209 | 173 | |||||
Federal-Mogul (5) | 2,414 | 1,690 | |||||
Real Estate Holdings (1) | 820 | 824 | |||||
PSC Metals (1) | 185 | 182 | |||||
WestPoint Home (1) | 139 | 144 | |||||
ARL/RemainCo (6) | 3 | 18 | |||||
Ferrous Resources (1) | 143 | 138 | |||||
Icahn Automotive Group (1) | 1,853 | 1,728 | |||||
Trump Entertainment (1) | 21 | 22 | |||||
Total - other subsidiaries | $ | 7,297 | $ | 6,359 | |||
Add: Holding Company cash and cash equivalents (7) | 199 | 526 | |||||
Less: Holding Company debt (7) | (5,506 | ) | (5,507 | ) | |||
Add: Other Holding Company net assets (8) | 226 | 189 | |||||
Indicative Net Asset Value | $ | 8,101 | $ | 7,860 | |||
Indicative net asset value does not purport to reflect a valuation of IEP. The calculated Indicative net asset value does not include any value for our Investment Segment other than the fair market value of our investment in the Investment Funds. A valuation is a subjective exercise and Indicative net asset value does not necessarily consider all elements or consider in the adequate proportion the elements that could affect the valuation of IEP. Investors may reasonably differ on what such elements are and their impact on IEP. No representation or assurance, expressed or implied is made as to the accuracy and correctness of indicative net asset value as of these dates or with respect to any future indicative or prospective results which may vary.
- Represents equity attributable to us as of each respective date.
- Based on closing share price on each date (or if such date was not a trading day, the immediately preceding trading day) and the number of shares owned by the Holding Company as of each respective date.
March 31, 2018 value is pro-forma the announced sale ofTropicana .December 31, 2017 based on market comparables due to lack of material trading volume, valued at 9.0x Adjusted EBITDA for the twelve months endedDecember 31, 2017 .- Amounts based on market comparables due to lack of material trading volume, valued at 9.0x Adjusted EBITDA for the twelve months ended
March 31, 2018 andDecember 31, 2017 . March 31, 2018 value is pro-forma the announced sale toTenneco Inc. December 31, 2017 represents the value of the company based on IEP's tender offer during Q1 2017.March 31, 2018 andDecember 31, 2017 represents the option purchase price of the remaining cars not sold in the initial ARL sale, plus working capital as of that date.- Holding Company's balance as of each respective date.
- Holding Company's balance as of each respective date. For
March 31, 2018 , the distribution payable was adjusted to$24 million , which represents the actual distribution paid subsequent toMarch 31, 2018 .
($ in millions) | Three Months Ended March 31, | ||||||
2018 | 2017 | ||||||
Consolidated Adjusted EBITDA: | (Unaudited) | ||||||
Net income (loss) | $ | 423 | $ | (160 | ) | ||
Interest expense, net | 195 | 222 | |||||
Income tax expense | 56 | 26 | |||||
Depreciation and amortization | 250 | 243 | |||||
Consolidated EBITDA | $ | 924 | $ | 331 | |||
Impairment of assets | — | 8 | |||||
Restructuring costs | 2 | 7 | |||||
Non-Service cost US based pensions | 13 | 9 | |||||
FIFO impact favorable | (20 | ) | — | ||||
Major scheduled turnaround expense | — | 13 | |||||
Loss on extinguishment of debt | — | 2 | |||||
(Gain) loss on disposition of assets | (3 | ) | 5 | ||||
Unrealized gain on certain derivatives | (46 | ) | (11 | ) | |||
Other | 26 | 25 | |||||
Consolidated Adjusted EBITDA | $ | 896 | $ | 389 | |||
IEP Adjusted EBITDA: | |||||||
Net income (loss) attributable to IEP | $ | 137 | $ | (18 | ) | ||
Interest expense, net | 160 | 168 | |||||
Income tax expense | 51 | 20 | |||||
Depreciation and amortization | 204 | 195 | |||||
EBITDA attributable to IEP | $ | 552 | $ | 365 | |||
Impairment of assets | — | 8 | |||||
Restructuring costs | 2 | 7 | |||||
Non-Service cost US based pensions | 11 | 9 | |||||
FIFO impact favorable | (12 | ) | — | ||||
Major scheduled turnaround expense | — | 8 | |||||
Loss on extinguishment of debt | — | 2 | |||||
(Gain) loss on disposition of assets | (3 | ) | 5 | ||||
Unrealized gain on certain derivatives | (26 | ) | (6 | ) | |||
Other | 27 | 23 | |||||
Adjusted EBITDA attributable to IEP | $ | 551 | $ | 421 | |||
($ in millions) | Three Months Ended March 31, | ||||||
2018 | 2017 | ||||||
Consolidated Adjusted EBIT: | (Unaudited) | ||||||
Net income (loss) | $ | 423 | $ | (160 | ) | ||
Interest expense, net | 195 | 222 | |||||
Income tax expense | 56 | 26 | |||||
Consolidated EBIT | $ | 674 | $ | 88 | |||
Impairment of assets | — | 8 | |||||
Restructuring costs | 2 | 7 | |||||
Non-Service cost US based pensions | 13 | 9 | |||||
FIFO impact favorable | (20 | ) | — | ||||
Major scheduled turnaround expense | — | 13 | |||||
Loss on extinguishment of debt | — | 2 | |||||
(Gain) loss on disposition of assets | (3 | ) | 5 | ||||
Unrealized gain on certain derivatives | (46 | ) | (11 | ) | |||
Other | 26 | 25 | |||||
Consolidated Adjusted EBIT | $ | 646 | $ | 146 | |||
IEP Adjusted EBIT: | |||||||
Net income (loss) attributable to IEP | $ | 137 | $ | (18 | ) | ||
Interest expense, net | 160 | 168 | |||||
Income tax expense | 51 | 20 | |||||
EBIT attributable to IEP | $ | 348 | $ | 170 | |||
Impairment of assets | — | 8 | |||||
Restructuring costs | 2 | 7 | |||||
Non-Service cost US based pensions | 11 | 9 | |||||
FIFO impact favorable | (12 | ) | — | ||||
Major scheduled turnaround expense | — | 8 | |||||
Loss on extinguishment of debt | — | 2 | |||||
(Gain) loss on disposition of assets | (3 | ) | 5 | ||||
Unrealized gain on certain derivatives | (26 | ) | (6 | ) | |||
Other | 27 | 23 | |||||
Adjusted EBIT attributable to IEP | $ | 347 | $ | 226 | |||
Investor Contacts:
(212) 702-4300
Source: Icahn Enterprises L.P.