Icahn Enterprises

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11/08/18

Icahn Enterprises L.P. Reports Third Quarter 2018 Financial Results

  • For the trailing twelve months ended September 30, 2018 indicative net asset value increased by $1.57 billion to $8.64 billion compared to $7.08 billion as of September 30, 2017

NEW YORK, Nov. 08, 2018 (GLOBE NEWSWIRE) -- Icahn Enterprises L.P. (NASDAQ:IEP) is reporting third quarter 2018 revenues of $2.7 billion and net income attributable to Icahn Enterprises of $126 million, or $0.68 per depositary unit, including a loss of $29 million from continuing operations, or $0.16 per depositary unit. For the three months ended September 30, 2017 revenues were $3.5 billion and net income attributable to Icahn Enterprises was $597 million, or $3.53 per depositary unit, including $577 million from continuing operations, or $3.41 per depositary unit. For the three months ended September 30, 2018, Adjusted EBITDA attributable to Icahn Enterprises was $26 million compared to $345 million for the three months ended September 30, 2017. For the three months ended September 30, 2018, Adjusted EBIT attributable to Icahn Enterprises was a loss of $55 million compared to income of $260 million for the three months ended September 30, 2017.

For the nine months ended September 30, 2018, revenues were $9.4 billion and net income attributable to Icahn Enterprises was $572 million, or $3.15 per depositary unit, including $243 million from continuing operations, or $1.34 per depositary unit. For the nine months ended September 30, 2017 revenues were $10.5 billion and net income attributable to Icahn Enterprises was $2.1 billion, or $13.23 per depositary unit, including $2.0 billion from continuing operations, or $12.58 per depositary unit. The prior year period includes a $1.0 billion gain, net of tax, from the sale of ARL in June 2017. For the nine months ended September 30, 2018, Adjusted EBITDA attributable to Icahn Enterprises was $689 million compared to $813 million for the nine months ended September 30, 2017. For the nine months ended September 30, 2018, Adjusted EBIT attributable to Icahn Enterprises was $434 million compared to $547 million for the nine months ended September 30, 2017.

For the twelve months ended September 30, 2018 indicative net asset value increased by $1.57 billion to $8.64 billion compared to $7.08 billion as of September 30, 2017. For the nine months ended September 30, 2018 indicative net asset value increased by $784 million to $8.64 billion compared to $7.86 billion as of December 31, 2017.

Icahn Enterprises L.P., a master limited partnership, is a diversified holding company engaged in nine primary business segments: Investment, Automotive, Energy, Railcar, Metals, Mining, Food Packaging, Real Estate and Home Fashion.

Caution Concerning Forward-Looking Statements

Results for any interim period are not necessarily indicative of results for any full fiscal period. This release may contain 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 Icahn Enterprises L.P. and its subsidiaries. Actual events, results and outcomes may differ materially from our expectations due to a variety of known and unknown risks, uncertainties and other factors, including risks related to economic downturns, substantial competition and rising operating costs; risks related to our investment activities, including the nature of the investments made by the private funds in which we invest, losses in the private funds and loss of key employees; risks related to our ability to continue to conduct our activities in a manner so as to not be deemed an investment company under the Investment Company Act of 1940, as amended; risks related to our automotive activities, including exposure to adverse conditions in the automotive industry, and risks related to operations in foreign countries; risks related to our energy business, including the volatility and availability of crude oil, other feed stocks and refined products, unfavorable refining margin (crack spread), interrupted access to pipelines, significant fluctuations in nitrogen fertilizer demand in the agricultural industry and seasonality of results; risks related to our railcar activities, including reliance upon a small number of customers that represent a large percentage of revenues and backlog, the health of and prospects for the overall railcar industry and the cyclical nature of the railcar manufacturing business; risks related to our food packaging activities, including competition from better capitalized competitors, inability of its suppliers to timely deliver raw materials, and the failure to effectively respond to industry changes in casings technology; risks related to our scrap metals activities, including potential environmental exposure; risks related to our real estate activities, including the extent of any tenant bankruptcies and insolvencies; risks related to our home fashion operations, including changes in the availability and price of raw materials, and changes in transportation costs and delivery times; and other risks and uncertainties detailed from time to time in our filings with the Securities and Exchange Commission. Past performance in our Investment segment is not indicative of future performance. We undertake no obligation to publicly update or review any forward-looking information, whether as a result of new information, future developments or otherwise.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per unit amounts)

 

  Three Months Ended
September 30,
  Nine Months Ended
September 30,
  2018   2017   2018   2017
               
Revenues: (Unaudited)
Net sales $ 2,864     $ 2,404     $ 8,220     $ 7,107  
Other revenues from operations 217     181     632     705  
Net gain from investment activities (514 )   420     328     604  
Interest and dividend income 36     34     99     94  
Gain on disposition of assets, net 65     446     65     1,969  
Other income (loss), net 17     19     83     (11 )
  2,685     3,504     9,427     10,468  
Expenses:              
Cost of goods sold 2,406     2,054     7,007     6,174  
Other expenses from operations 173     144     490     469  
Selling, general and administrative 340     323     1,042     945  
Restructuring 17     1     20     3  
Impairment         7     76  
Interest expense 130     164     407     525  
  3,066     2,686     8,973     8,192  
(Loss) income from continuing operations before
  income tax benefit (expense)
(381 )   818     454     2,276  
Income tax benefit (expense) 71     (18 )   57     (13 )
(Loss) income from continuing operations (310 )   800     511     2,263  
Income from discontinued operations 163     29     353     131  
Net (loss) income (147 )   829     864     2,394  
Less: net (loss) income attributable to non-
  controlling interests
(273 )   232     292     262  
Net income attributable to Icahn Enterprises $ 126     $ 597     $ 572     $ 2,132  
               
Net (loss) income attributable to Icahn Enterprises
  from:
             
  Continuing operations $ (29 )   $ 577     $ 243     $ 2,027  
  Discontinued operations 155     20     329     105  
  $ 126     $ 597     $ 572     $ 2,132  
               
Net income attributable to Icahn Enterprises
  allocable to:
             
Limited partners $ 124     $ 586     $ 561     $ 2,090  
General partner 2     11     11     42  
  $ 126     $ 597     $ 572     $ 2,132  
               
Basic and diluted (loss) income per LP unit:              
Continuing operations $ (0.16 )   $ 3.41     $ 1.34     $ 12.58  
Discontinued operations 0.84     0.12     1.81     0.65  
  $ 0.68     $ 3.53     $ 3.15     $ 13.23  
Basic and diluted weighted average LP units
  outstanding
183     166     178     158  
Cash distributions declared per LP unit $ 1.75     $ 1.50     $ 5.25     $ 4.50  

 

 


CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions)

  September 30,
2018
  December 31,
2017
       
ASSETS (Unaudited)
Cash and cash equivalents $ 1,053     $ 1,264  
Cash held at consolidated affiliated partnerships and restricted cash 801     766  
Investments 9,332     10,038  
Due from brokers 338     506  
Accounts receivable, net 700     612  
Inventories, net 1,961     1,805  
Property, plant and equipment, net 6,179     6,364  
Goodwill 336     334  
Intangible assets, net 513     544  
Assets held for sale 8,891     8,790  
Other assets 871     778  
Total Assets $ 30,975     $ 31,801  
LIABILITIES AND EQUITY      
Accounts payable $ 1,025     $ 1,001  
Accrued expenses and other liabilities 1,069     1,033  
Deferred tax liability 787     924  
Unrealized loss on derivative contracts 985     1,275  
Securities sold, not yet purchased, at fair value 625     1,023  
Due to brokers 243     1,057  
Liabilities held for sale 5,998     6,202  
Debt 7,907     7,918  
Total liabilities 18,639     20,433  
       
Equity:      
Limited partners 5,837     5,341  
General partner (225 )   (235 )
Equity attributable to Icahn Enterprises 5,612     5,106  
Equity attributable to non-controlling interests 6,724     6,262  
Total equity 12,336     11,368  
Total Liabilities and Equity $ 30,975     $ 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 from continuing operations before interest expense, income tax (benefit) expense and depreciation and amortization. EBIT represents earnings from continuing operations 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 Icahn Enterprises net of the effect of non-controlling interests. We conduct substantially all of our operations through subsidiaries. The operating results of our subsidiaries may not be sufficient to make distributions to us. In addition, our subsidiaries are not obligated to make funds available to us for payment of our indebtedness, payment of distributions on our depositary units or otherwise, and distributions and intercompany transfers from our subsidiaries to us may be restricted by applicable law or covenants contained in debt agreements and other agreements to which these subsidiaries currently may be subject or into which they may enter into in the future. The terms of any borrowings of our subsidiaries or other entities in which we own equity may restrict dividends, distributions or loans to us.

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 the United States, or U.S. GAAP. For example, EBITDA, Adjusted EBITDA, EBIT and Adjusted EBIT:

  • 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) September 30,
2018
  December 31,
2017
  September 30,
2017
           
Market-valued Subsidiaries: (Unaudited)
Holding Company interest in Funds (1) $ 3,003     $ 3,052     $ 2,882  
CVR Energy (2) 2,864     2,651     1,844  
CVR Refining - direct holding (2) 113     95     57  
American Railcar Industries (2) 547     494     458  
  Total market-valued subsidiaries $ 6,527     $ 6,293     $ 5,241  
           
Other Subsidiaries:          
Tropicana (3) $ 1,566     $ 1,439     $ 1,440  
Viskase (4) 185     173     179  
Federal-Mogul (5) 2,041     1,690     1,690  
Real Estate Holdings (1) 888     824     851  
PSC Metals (1) 179     182     169  
WestPoint Home (1) 134     144     153  
RemainCo (6)     18     537  
Ferrous Resources (1) 166     138     123  
Icahn Automotive Group (1) 1,891     1,728     1,487  
Trump Entertainment (1) 27     22     64  
  Total - other subsidiaries $ 7,077     $ 6,359     $ 6,693  
  Add:  Holding Company cash and cash equivalents (7) 97     526     484  
  Less:  Holding Company debt (7) (5,505 )   (5,507 )   (5,508 )
  Add:  Other Holding Company net assets (7) 448     189     175  
Indicative Net Asset Value $ 8,644     $ 7,860     $ 7,085  

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.

  1. Represents equity attributable to us as of each respective date.
  2. 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.
  3. September 30, 2018 value is pro-forma the announced sale of Tropicana. December 31, 2017 and September 30, 2017 based on market comparables due to lack of material trading volume, valued at 9.0x Adjusted EBITDA for the twelve months ended December 31, 2017 and September 30, 2017.
  4. Amounts based on market comparables due to lack of material trading volume, valued at 9.0x Adjusted EBITDA for the twelve months ended September 30, 2018, December 31, 2017 and September 30, 2017.
  5. September 30, 2018 value is pro-forma the announced sale to Tenneco Inc.December 31, 2017 and September 30, 2017 represents the value of the company based on IEP's tender offer during Q1 2017.
  6. September 30, 2018, December 31, 2017 and September 30, 2017 represents the option purchase price of the remaining cars not sold in the initial ARL sale, plus working capital as of that date.
  7. Holding Company's balance as of each respective date.

($ in millions) Three Months Ended
September 30,
  Nine Months Ended
September 30,
  2018   2017   2018   2017
               
Consolidated Adjusted EBITDA: (Unaudited)
Net (loss) income from continuing operations $ (310 )   $ 800     $ 511     $ 2,263  
Interest expense, net 127     161     402     519  
Income tax (benefit) expense (71 )   18     (57 )   13  
Depreciation and amortization 124     130     384     398  
Consolidated EBITDA $ (130 )   $ 1,109     $ 1,240     $ 3,193  
Impairment of assets         7     76  
Restructuring costs 13     1     16     3  
Non-Service cost U.S. based pensions     1     8     3  
FIFO impact (unfavorable) favorable (3 )   (15 )   (45 )    
Major scheduled turnaround expense 1     24     7     40  
Gain on disposition of assets (65 )   (445 )   (70 )   (1,969 )
Unrealized loss (gain) on certain derivatives 4     17     (35 )   6  
Tax settlements     (38 )       (38 )
Other 6     16     34     38  
Consolidated Adjusted EBITDA $ (174 )   $ 670     $ 1,162     $ 1,352  
               
IEP Adjusted EBITDA:              
Net (loss) income from continuing operations attributable to Icahn Enterprises $ (29 )   $ 577     $ 243     $ 2,027  
Interest expense, net 107     116     325     371  
Income tax (benefit) expense (82 )   17     (75 )   10  
Depreciation and amortization 81     85     255     266  
EBITDA attributable to IEP $ 77     $ 795     $ 748     $ 2,674  
Impairment of assets         5     76  
Restructuring costs 11     1     14     2  
Non-Service cost U.S. based pensions     1     6     2  
FIFO impact (unfavorable) favorable (2 )   (9 )   (27 )    
Major scheduled turnaround expense 1     14     4     24  
Gain on disposition of assets (66 )   (445 )   (71 )   (1,969 )
Unrealized loss (gain) on certain derivatives 2     10     (21 )   4  
Tax settlements     (38 )       (38 )
Other 3     16     31     38  
Adjusted EBITDA attributable to IEP $ 26     $ 345     $ 689     $ 813  


($ in millions) Three Months Ended
September 30,
  Nine Months Ended
September 30,
  2018   2017   2018   2017
Consolidated Adjusted EBIT: (Unaudited)
Net (loss) income from continuing operations $ (310 )   $ 800     $ 511     $ 2,263  
Interest expense, net 127     161     402     519  
Income tax (benefit) expense (71 )   18     (57 )   13  
Consolidated EBIT $ (254 )   $ 979     $ 856     $ 2,795  
Impairment of assets         7     76  
Restructuring costs 13     1     16     3  
Non-Service cost U.S. based pensions     1     8     3  
FIFO impact (unfavorable) favorable (3 )   (15 )   (45 )    
Major scheduled turnaround expense 1     24     7     40  
Gain on disposition of assets (65 )   (445 )   (70 )   (1,969 )
Unrealized loss (gain) on certain derivatives 4     17     (35 )   6  
Tax settlements     (38 )       (38 )
Other 6     16     34     38  
Consolidated Adjusted EBIT $ (298 )   $ 540     $ 778     $ 954  
               
IEP Adjusted EBIT:              
Net (loss) income from continuing operations attributable to Icahn Enterprises $ (29 )   $ 577     $ 243     $ 2,027  
Interest expense, net 107     116     325     371  
Income tax (benefit) expense (82 )   17     (75 )   10  
EBIT attributable to IEP $ (4 )   $ 710     $ 493     $ 2,408  
Impairment of assets         5     76  
Restructuring costs 11     1     14     2  
Non-Service cost U.S. based pensions     1     6     2  
FIFO impact (unfavorable) favorable (2 )   (9 )   (27 )    
Major scheduled turnaround expense 1     14     4     24  
Gain on disposition of assets (66 )   (445 )   (71 )   (1,969 )
Unrealized loss (gain) on certain derivatives 2     10     (21 )   4  
Tax settlements     (38 )       (38 )
Other 3     16     31     38  
Adjusted EBIT attributable to IEP $ (55 )   $ 260     $ 434     $ 547  

 

Investor Contacts:
SungHwan Cho, Chief Financial Officer
Peter Reck, Chief Accounting Officer
(212) 702-4300

Source: Icahn Enterprises L.P.