Icahn Enterprises L.P. (NASDAQ:IEP) is reporting first quarter 2019
revenues of $1.9 billion and net loss attributable to Icahn
Enterprises of $394 million, or a loss of $2.02 per depositary
unit. For the three months ended March 31, 2018, revenues were
$3.0 billion and net income attributable to Icahn Enterprises was
$132 million, or $0.74 per depositary unit, including $98 million
from continuing operations, or $0.55 per depositary unit. For the
three months ended March 31, 2019, Adjusted EBITDA
attributable to Icahn Enterprises was $(194) million compared to
$325 million for the three months ended March 31, 2018. For the
three months ended March 31, 2019, Adjusted EBIT attributable
to Icahn Enterprises was $(281) million compared to $238 million
for the three months ended March 31, 2018.
For the three months ended March 31, 2019, indicative net
asset value increased to $8.19 billion compared to $8.15 billion as
of December 31, 2018.
On April 30, 2019, 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 June 20, 2019 to depositary unitholders of record at the
close of business on May 13, 2019. Depositary unitholders will
have until June 10, 2019 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 June 17, 2019. 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.
Open Market Sales Agreement
Icahn Enterprises intends to enter into an Open Market Sales
Agreement with Jefferies LLC, pursuant to which the Company may
sell its depositary units, from time to time, for up to $400
million in aggregate sales proceeds. Under this two-year program,
the Company may issue and sell its depositary units from time to
time directly on or through the Nasdaq Global Select Market or any
other existing trading market for the depositary units, at such
prices and times as the Company may agree with Jefferies. The
proceeds from these transactions, if any, will be used to fund
potential acquisitions as well as for general limited partnership
purposes. Icahn Enterprises also believes the sales under this
program, if any, will strengthen the Company’s credit profile,
expand the Company’s unitholder base and improve daily trading
liquidity.
This communication does not constitute an offer to sell or the
solicitation of an offer to buy any securities. It does not
constitute a prospectus or prospectus equivalent document. Offers
of securities shall only be made by means of a prospectus meeting
the requirements of Section 10 of the U.S. Securities Act of 1933,
as amended, once available.
Icahn Enterprises L.P., a master limited partnership, is a
diversified holding company engaged in eight primary business
segments: Investment, Energy, Automotive, Food Packaging, Metals,
Real Estate, Home Fashion and Mining.
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 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 automotive activities, including exposure to adverse conditions
in the automotive industry; 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 March 31, |
|
2019 |
|
|
2018 |
|
|
|
|
|
|
|
|
|
|
(Unaudited) |
Revenues: |
|
|
|
Net
sales |
$ |
2,300 |
|
|
$ |
2,364 |
|
Other
revenues from operations |
162 |
|
|
158 |
|
Net
(loss) gain from investment activities |
(674 |
) |
|
432 |
|
Interest
and dividend income |
64 |
|
|
26 |
|
Other income,
net |
3 |
|
|
3 |
|
|
1,855 |
|
|
2,983 |
|
Expenses: |
|
|
|
Cost of
goods sold |
1,900 |
|
|
1,987 |
|
Other
expenses from operations |
131 |
|
|
125 |
|
Selling,
general and administrative |
336 |
|
|
338 |
|
Restructuring |
7 |
|
|
2 |
|
Interest
expense |
139 |
|
|
147 |
|
|
2,513 |
|
|
2,599 |
|
(Loss) income from
continuing operations before income tax expense |
(658 |
) |
|
384 |
|
Income tax expense |
(6 |
) |
|
(17 |
) |
(Loss) income from
continuing operations |
(664 |
) |
|
367 |
|
Income from
discontinued operations |
— |
|
|
45 |
|
Net (loss) income |
(664 |
) |
|
412 |
|
Less: net income (loss)
attributable to non-controlling interests |
(270 |
) |
|
280 |
|
Net (loss) income
attributable to Icahn Enterprises |
$ |
(394 |
) |
|
$ |
132 |
|
|
|
|
|
Net (loss) income
attributable to Icahn Enterprises from: |
|
|
|
Continuing
operations |
$ |
(394 |
) |
|
$ |
98 |
|
Discontinued
operations |
— |
|
|
34 |
|
|
$ |
(394 |
) |
|
$ |
132 |
|
|
|
|
|
Net (loss) income
attributable to Icahn Enterprises allocated to: |
|
|
|
Limited
partners |
$ |
(386 |
) |
|
$ |
129 |
|
General
partner |
(8 |
) |
|
3 |
|
|
$ |
(394 |
) |
|
$ |
132 |
|
|
|
|
|
Basic (loss) income per
LP unit: |
|
|
|
Continuing operations |
$ |
(2.02 |
) |
|
$ |
0.55 |
|
Discontinued operations |
0.00 |
|
|
0.19 |
|
|
$ |
(2.02 |
) |
|
$ |
0.74 |
|
Basic weighted average
LP units outstanding |
191 |
|
|
174 |
|
Diluted (loss) income
per LP unit: |
|
|
|
Continuing operations |
$ |
(2.02 |
) |
|
$ |
0.55 |
|
Discontinued operations |
0.00 |
|
|
0.19 |
|
|
$ |
(2.02 |
) |
|
$ |
0.74 |
|
Diluted weighted
average LP units outstanding |
191 |
|
|
175 |
|
Cash distributions
declared per LP unit |
$ |
2.00 |
|
|
$ |
1.75 |
|
CONDENSED CONSOLIDATED BALANCE
SHEETS(In millions)
|
March 31, 2019 |
|
December 31, 2018 |
ASSETS |
(Unaudited) |
Cash and cash
equivalents |
$ |
2,764 |
|
|
$ |
2,656 |
|
Cash held at
consolidated affiliated partnerships and restricted cash |
2,299 |
|
|
2,682 |
|
Investments |
8,103 |
|
|
8,337 |
|
Due from brokers |
1,224 |
|
|
664 |
|
Accounts receivable,
net |
517 |
|
|
474 |
|
Inventories, net |
1,852 |
|
|
1,779 |
|
Property, plant and
equipment, net |
4,682 |
|
|
4,688 |
|
Goodwill |
255 |
|
|
247 |
|
Intangible assets,
net |
464 |
|
|
501 |
|
Assets held for
sale |
364 |
|
|
333 |
|
Other assets |
1,300 |
|
|
1,128 |
|
Total
Assets |
$ |
23,824 |
|
|
$ |
23,489 |
|
LIABILITIES AND EQUITY |
|
|
|
Accounts payable |
$ |
894 |
|
|
$ |
832 |
|
Accrued expenses and
other liabilities |
1,896 |
|
|
900 |
|
Deferred tax
liability |
685 |
|
|
694 |
|
Unrealized loss on
derivative contracts |
722 |
|
|
36 |
|
Securities sold, not
yet purchased, at fair value |
447 |
|
|
468 |
|
Due to brokers |
— |
|
|
141 |
|
Liabilities held for
sale |
136 |
|
|
112 |
|
Debt |
7,392 |
|
|
7,326 |
|
Total liabilities |
12,172 |
|
|
10,509 |
|
|
|
|
|
Equity: |
|
|
|
Limited
partners |
6,643 |
|
|
7,350 |
|
General
partner |
(804 |
) |
|
(790 |
) |
Equity attributable to
Icahn Enterprises |
5,839 |
|
|
6,560 |
|
Equity attributable to
non-controlling interests |
5,813 |
|
|
6,420 |
|
Total equity |
11,652 |
|
|
12,980 |
|
Total
Liabilities and Equity |
$ |
23,824 |
|
|
$ |
23,489 |
|
|
|
|
|
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 and Adjusted EBITDA 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, certain
gains/losses on disposition of assets, certain share based
compensation, discontinued operations, gains/losses on
extinguishment of debt, major scheduled turnaround expenses 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.
|
March 31, 2019 |
|
December 31, 2018 |
Market-valued
Subsidiaries: |
(Unaudited) |
Holding Company interest
in Funds (1) |
$ |
4,772 |
|
|
$ |
5,066 |
|
CVR Energy (2) |
2,933 |
|
|
2,455 |
|
CVR Refining - direct
holding (2) |
— |
|
|
60 |
|
Tenneco Inc.(2) |
652 |
|
|
806 |
|
Total
market-valued subsidiaries |
$ |
8,357 |
|
|
$ |
8,387 |
|
|
|
|
|
Other
Subsidiaries: |
|
|
|
Viskase (3) |
$ |
141 |
|
|
$ |
147 |
|
Real Estate Holdings
(1) |
444 |
|
|
465 |
|
PSC Metals (1) |
174 |
|
|
177 |
|
WestPoint Home (1) |
129 |
|
|
133 |
|
Ferrous Resources
(4) |
428 |
|
|
423 |
|
Icahn Automotive Group
(1) |
1,832 |
|
|
1,747 |
|
Total - other
subsidiaries |
$ |
3,148 |
|
|
$ |
3,092 |
|
Add:
Holding Company cash and cash equivalents (5) |
2,139 |
|
|
1,834 |
|
Less:
Holding Company debt (5) |
(5,505 |
) |
|
(5,505 |
) |
Add: Other
Holding Company net assets (5) |
50 |
|
|
344 |
|
Indicative Net
Asset Value |
$ |
8,189 |
|
|
$ |
8,152 |
|
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 March 31, 2019 and December 31, 2018.
(4) March 31, 2019 and December 31, 2018 represents the
estimated proceeds based on the sale agreement signed during
December 2018.
(5) Holding Company's balance as of each respective date. For
March 31, 2019, the distribution payable was adjusted to $27
million, which represents the distribution paid subsequent to March
31, 2019.
($ in millions) |
Three Months Ended March 31, |
|
2019 |
|
|
2018 |
|
|
|
|
|
|
|
|
(Unaudited) |
Consolidated
Adjusted EBITDA: |
|
|
|
Net (loss) income from
continuing operations |
$ |
(664 |
) |
|
$ |
367 |
|
Interest expense,
net |
126 |
|
|
147 |
|
Income tax expense |
6 |
|
|
17 |
|
Depreciation and
amortization |
123 |
|
|
131 |
|
Consolidated
EBITDA |
$ |
(409 |
) |
|
$ |
662 |
|
Restructuring
costs |
7 |
|
|
2 |
|
Non-Service cost U.S.
based pensions |
1 |
|
|
8 |
|
Loss (gain) on
disposition of assets |
2 |
|
|
(4 |
) |
Other |
5 |
|
|
5 |
|
Consolidated
Adjusted EBITDA |
$ |
(394 |
) |
|
$ |
673 |
|
|
|
|
|
IEP Adjusted
EBITDA: |
|
|
|
Net (loss) income from
continuing operations attributable to Icahn Enterprises |
$ |
(394 |
) |
|
$ |
98 |
|
Interest expense,
net |
101 |
|
|
114 |
|
Income tax expense |
1 |
|
|
16 |
|
Depreciation and
amortization |
87 |
|
|
87 |
|
EBITDA
attributable to IEP |
$ |
(205 |
) |
|
$ |
315 |
|
Restructuring
costs |
5 |
|
|
2 |
|
Non-Service cost U.S.
based pensions |
1 |
|
|
6 |
|
Loss (gain) on
disposition of assets |
2 |
|
|
(4 |
) |
Other |
3 |
|
|
6 |
|
Adjusted EBITDA
attributable to IEP |
$ |
(194 |
) |
|
$ |
325 |
|
($ in millions) |
Three Months Ended March 31, |
|
2019 |
|
|
2018 |
|
|
|
|
|
|
(Unaudited) |
Consolidated
Adjusted EBIT: |
|
|
|
Net (loss) income from
continuing operations |
$ |
(664 |
) |
|
$ |
367 |
|
Interest expense,
net |
126 |
|
|
147 |
|
Income tax expense |
6 |
|
|
17 |
|
Consolidated
EBIT |
$ |
(532 |
) |
|
$ |
531 |
|
Restructuring
costs |
7 |
|
|
2 |
|
Non-Service cost U.S.
based pensions |
1 |
|
|
8 |
|
Loss (gain) on
disposition of assets |
2 |
|
|
(4 |
) |
Other |
5 |
|
|
5 |
|
Consolidated
Adjusted EBIT |
$ |
(517 |
) |
|
$ |
542 |
|
|
|
|
|
IEP Adjusted
EBIT: |
|
|
|
Net (loss) income from
continuing operations attributable to Icahn Enterprises |
$ |
(394 |
) |
|
$ |
98 |
|
Interest expense,
net |
101 |
|
|
114 |
|
Income tax expense |
1 |
|
|
16 |
|
EBIT
attributable to IEP |
$ |
(292 |
) |
|
$ |
228 |
|
Restructuring
costs |
5 |
|
|
2 |
|
Non-Service cost U.S.
based pensions |
1 |
|
|
6 |
|
Loss (gain) on
disposition of assets |
2 |
|
|
(4 |
) |
Other |
3 |
|
|
6 |
|
Adjusted EBIT
attributable to IEP |
$ |
(281 |
) |
|
$ |
238 |
|
Investor Contacts:SungHwan Cho, Chief Financial OfficerPeter
Reck, Chief Accounting Officer(212) 702-4300
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