Icahn Enterprises

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11/06/20

Icahn Enterprises L.P. Reports Third Quarter 2020 Financial Results

  • Third quarter net loss attributable to Icahn Enterprises of $714 million, or a loss $3.14 per depositary unit

  • Board approves quarterly distribution of $2.00 per depositary unit

SUNNY ISLES BEACH, Fla., Nov. 06, 2020 (GLOBE NEWSWIRE) -- Icahn Enterprises L.P. (NASDAQ:IEP) is reporting third quarter 2020 revenues of $722 million and net loss attributable to Icahn Enterprises of $714 million, or a loss of $3.14 per depositary unit. For the three months ended September 30, 2019, revenues were $2.3 billion and net loss attributable to Icahn Enterprises was $49 million, or a loss of $0.24 per depositary unit. For the three months ended September 30, 2020, Adjusted EBITDA attributable to Icahn Enterprises was $(550) million compared to $(121) million for the three months ended September 30, 2019. For the three months ended September 30, 2020, Adjusted EBIT attributable to Icahn Enterprises was $(637) million compared to $(209) million for the three months ended September 30, 2019.

For the nine months ended September 30, 2020, revenues were $3.4 billion and net loss attributable to Icahn Enterprises was $1.8 billion, or a loss of $8.12 per depositary unit. For the nine months ended September 30, 2019, revenues were $6.4 billion and net loss attributable to Icahn Enterprises was $941 million, or a loss of $4.68 per depositary unit, including a loss of $917 million from continuing operations, or $4.56 per depositary unit. For the nine months ended September 30, 2020, Adjusted EBITDA attributable to Icahn Enterprises was $(1.2) billion compared to $(573) million for the nine months ended September 30, 2019. For the nine months ended September 30, 2020, Adjusted EBIT attributable to Icahn Enterprises was $(1.4) billion compared to $(840) million for the nine months ended September 30, 2019.

On November 4, 2020, the Board of Directors of the general partner of Icahn Enterprises declared a quarterly distribution in the amount of $2.00 per depositary unit, which will be paid on or about December 29, 2020 to depositary unitholders of record at the close of business on November 24, 2020. Depositary unitholders will have until December 17, 2020 to make an election to receive either cash or additional depositary units; if a unitholder does not make an election, it will automatically be deemed to have elected to receive the distribution in cash. Depositary unitholders who elect to receive additional depositary units will receive units valued at the volume weighted average trading price of the units on NASDAQ during the 5 consecutive trading days ending December 24, 2020. No fractional depositary units will be issued pursuant to the distribution payment. Icahn Enterprises will make a cash payment in lieu of issuing fractional depositary units to any unitholders electing to receive depositary units. Any unitholders that would only be eligible to receive a fraction of a depositary unit based on the above calculation will receive a cash payment.

Icahn Enterprises L.P., a master limited partnership, is a diversified holding company engaged in seven primary business segments: Investment, Energy, Automotive, Food Packaging, Metals, 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 the severity, magnitude and duration of the COVID-19 pandemic and its impact on the global economy, financial markets and industries in which our subsidiaries operate; risks related to our investment activities, including the nature of the investments made by the private funds in which we invest, declines in the fair value of our investments as a result of the COVID-19 pandemic, 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 energy business, including the volatility and availability of crude oil, declines in global demand for crude oil, refined products and liquid transportation fuels as a result of the COVID-19 pandemic, 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 automotive activities and exposure to adverse conditions in the automotive industry, including as a result of the COVID-19 pandemic; risks related to our food packaging activities, including competition from better capitalized competitors, inability of 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
(UNAUDITED)

                         
    Three Months Ended September 30   Nine Months Ended September 30
    2020     2019     2020     2019  
    (In millions, except per unit amounts)
Revenues:                        
Net sales   $ 1,764     $ 2,484     $ 4,950     $ 7,371  
Other revenues from operations     163       170       460       504  
Net loss from investment activities     (1,259 )     (657 )     (2,152 )     (1,968 )
Interest and dividend income     46       69       135       192  
Gain on disposition of assets, net     7       249       5       256  
Other income (loss), net     1       5       (27 )     16  
      722       2,320       3,371       6,371  
Expenses:                        
Cost of goods sold     1,599       2,069       4,543       6,098  
Other expenses from operations     127       141       369       409  
Selling, general and administrative     289       352       888       1,027  
Restructuring, net     1       4       8       15  
Impairment     1             6       1  
Interest expense     171       153       517       443  
      2,188       2,719       6,331       7,993  
Loss before income tax benefit     (1,466 )     (399 )     (2,960 )     (1,622 )
Income tax benefit     66       26       118       12  
Loss from continuing operations     (1,400 )     (373 )     (2,842 )     (1,610 )
Loss from discontinued operations                       (24 )
Net loss     (1,400 )     (373 )     (2,842 )     (1,634 )
Less: net loss attributable to non-controlling interests     (686 )     (324 )     (1,043 )     (693 )
Net loss attributable to Icahn Enterprises   $ (714 )   $ (49 )   $ (1,799 )   $ (941 )
                         
Net loss attributable to Icahn Enterprises from:                        
Continuing operations   $ (714 )   $ (49 )   $ (1,799 )   $ (917 )
Discontinued operations                       (24 )
    $ (714 )   $ (49 )   $ (1,799 )   $ (941 )
Net loss attributable to Icahn Enterprises allocated to:                        
Limited partners   $ (700 )   $ (48 )   $ (1,763 )   $ (922 )
General partner     (14 )     (1 )     (36 )     (19 )
    $ (714 )   $ (49 )   $ (1,799 )   $ (941 )
                         
Basic and diluted loss per LP unit:                        
Continuing operations   $ (3.14 )   $ (0.24 )   $ (8.12 )   $ (4.56 )
Discontinued operations                       (0.12 )
Basic and diluted loss per LP unit   $ (3.14 )   $ (0.24 )   $ (8.12 )   $ (4.68 )
Basic and diluted weighted average LP units outstanding     223       202       217       197  
Cash distributions declared per LP unit   $ 2.00     $ 2.00     $ 6.00     $ 6.00  
                                 



CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

             
    September 30   December 31
    2020     2019  
    (In millions)
ASSETS            
Cash and cash equivalents   $ 1,862     $ 3,794  
Cash held at consolidated affiliated partnerships and restricted cash     2,687       1,151  
Investments     6,910       9,945  
Due from brokers     1,682       858  
Accounts receivable, net     443       483  
Inventories, net     1,536       1,795  
Property, plant and equipment, net     4,297       4,454  
Unrealized gain on derivative contracts     1,439       182  
Goodwill     284       282  
Intangible assets, net     400       431  
Other assets     1,284       1,264  
Total Assets   $ 22,824     $ 24,639  
LIABILITIES AND EQUITY            
Accounts payable   $ 663     $ 945  
Accrued expenses and other liabilities     1,451       1,453  
Deferred tax liability     578       639  
Unrealized loss on derivative contracts     172       1,224  
Securities sold, not yet purchased, at fair value     970       1,190  
Due to brokers     1,971       54  
Debt     8,146       8,192  
Total liabilities     13,951       13,697  
             
Equity:            
Limited partners     4,086       6,268  
General partner     (856 )     (812 )
Equity attributable to Icahn Enterprises     3,230       5,456  
Equity attributable to non-controlling interests     5,643       5,486  
Total equity     8,873       10,942  
Total Liabilities and Equity   $ 22,824     $ 24,639  
                 


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 certain effects of impairment, restructuring costs, certain pension plan expenses, gains/losses on disposition of assets, gains/losses on extinguishment of debt, major scheduled turnaround expenses, certain tax settlements and certain other non-operational charges.  We present EBITDA, Adjusted EBITDA, EBIT and Adjusted EBIT on a consolidated basis and on a basis attributable to Icahn Enterprises net of the effects 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 certain effects of impairment, restructuring costs, certain pension plan expenses, gains/losses on disposition of assets, gains/losses on extinguishment of debt, major scheduled turnaround expenses, certain tax settlements 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 depositary 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 depositary units as calculated by management.

See below for more information on how we calculate the Company’s indicative net asset value.

       
  September 30   December 31,
    2020       2019  
  (In millions)(Unaudited)
Market-valued Subsidiaries and Investments:      
Holding Company interest in Investment Funds(1) $ 4,058     $ 4,296  
CVR Energy(2)   881       2,879  
Tenneco(2)   204       386  
Total market-valued subsidiaries and investments $ 5,143     $ 7,561  
       
Other Subsidiaries:      
Viskase(3) $ 240     $ 84  
Real Estate Holdings(1)   433       474  
PSC Metals(1)   144       156  
WestPoint Home(1)   145       147  
Icahn Automotive Group(1)   1,654       1,750  
Total other subsidiaries $ 2,616     $ 2,611  
Add: Other Holding Company net assets(4)   185       186  
Indicative Gross Asset Value $ 7,944     $ 10,358  
Add: Holding Company cash and cash equivalents(4)   987       3,006  
Less: Holding Company debt(4)   (5,812 )     (6,297 )
Indicative Net Asset Value $ 3,119     $ 7,067  
               

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)  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, 2020 and December 31, 2019. September 30, 2020 is pro forma for Viskase’s $100 million equity private placement and debt refinancing completed in October 2020.
(4)  Holding Company’s balance as of each respective date. For September 30, 2020, Holding Company cash and cash equivalents is pro forma for Viskase’s $100 million equity private placement completed in October 2020.


               
  Three Months Ended September 30   Nine Months Ended September 30
    2020       2019       2020       2019  
  (In millions)(Unaudited)
Adjusted EBITDA              
Net income (loss) $ (1,400 )   $ (373 )   $ (2,842 )   $ (1,610 )
Interest expense, net   168       134       501       395  
Income tax expense (benefit)   (66 )     (26 )     (118 )     (12 )
Depreciation, depletion and amortization   126       129       379       389  
EBITDA before non-controlling interests   (1,172 )     (136 )     (2,080 )     (838 )
Impairment of assets   1       -       6       1  
Restructuring costs   1       4       8       15  
Non-service cost of U.S. based pension   -       1       -       2  
(Gain) loss on disposition of assets, net   (7 )     (252 )     (7 )     (251 )
Other   14       17       93       37  
Adj. EBITDA before non-controlling interests $ (1,163 )   $ (366 )   $ (1,980 )   $ (1,034 )
               
Adjusted EBITDA attributable to IEP              
Net income (loss) $ (714 )   $ (49 )   $ (1,799 )   $ (917 )
Interest expense, net   123       105       375       314  
Income tax expense (benefit)   (55 )     (33 )     (89 )     (35 )
Depreciation, depletion and amortization   87       88       260       267  
EBITDA attributable to IEP   (559 )     111       (1,253 )     (371 )
Impairment of assets   1       -       6       1  
Restructuring costs   1       4       8       13  
Non-service cost of U.S. based pension   -       1       -       2  
(Gain) loss on disposition of assets, net   (7 )     (252 )     (7 )     (251 )
Other   14       15       88       33  
Adjusted EBITDA attributable to IEP $ (550 )   $ (121 )   $ (1,158 )   $ (573 )
                               



               
  Three Months Ended September 30   Nine Months Ended September 30
    2020       2019       2020       2019  
  (In millions)(Unaudited)
Adjusted EBIT              
Net income (loss) $ (1,400 )   $ (373 )   $ (2,842 )   $ (1,610 )
Interest expense, net   168       134       501       395  
Income tax expense (benefit)   (66 )     (26 )     (118 )     (12 )
EBIT before non-controlling interests   (1,298 )     (265 )     (2,459 )     (1,227 )
Impairment of assets   1       -       6       1  
Restructuring costs   1       4       8       15  
Non-service cost of U.S. based pension   -       1       -       2  
(Gain) loss on disposition of assets, net   (7 )     (252 )     (7 )     (251 )
Other   14       17       93       37  
Adj. EBIT before non-controlling interests $ (1,289 )   $ (495 )   $ (2,359 )   $ (1,423 )
               
Adjusted EBIT attributable to IEP              
Net income (loss) $ (714 )   $ (49 )   $ (1,799 )   $ (917 )
Interest expense, net   123       105       375       314  
Income tax expense (benefit)   (55 )     (33 )     (89 )     (35 )
EBIT attributable to IEP   (646 )     23       (1,513 )     (638 )
Impairment of assets   1       -       6       1  
Restructuring costs   1       4       8       13  
Non-service cost of U.S. based pension   -       1       -       2  
(Gain) loss on disposition of assets, net   (7 )     (252 )     (7 )     (251 )
Other   14       15       88       33  
Adjusted EBIT attributable to IEP $ (637 )   $ (209 )   $ (1,418 )   $ (840 )
                               

Investor Contacts:
SungHwan Cho, Chief Financial Officer
(305) 422-4000


Source: Icahn Enterprises L.P.