UPDATE -- Icahn Enterprises L.P. Reports First Quarter 2017 Financial Results

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| Source: Icahn Enterprises L.P.

NEW YORK, May 09, 2017 (GLOBE NEWSWIRE) -- Icahn Enterprises L.P. (NASDAQ:IEP) is reporting first quarter 2017 revenues of $4.7 billion and net loss attributable to Icahn Enterprises of $18 million, or a loss of $0.12 per depositary unit.  For the three months ended March 31, 2016 revenues were $3.1 billion and net loss attributable to Icahn Enterprises was $837 million, or a loss of $6.21 per depositary unit.  For the three months ended March 31, 2017, Adjusted EBITDA attributable to Icahn Enterprises was $412 million compared to a loss of $70 million for the three months ended March 31, 2016.  For the three months ended March 31, 2017, Adjusted EBIT attributable to Icahn Enterprises was $217 million compared to a loss of $249 million for the three months ended March 31, 2016. For the first quarter 2017 indicative net asset value increased by $158 million to $5.7 billion compared to $5.6 billion as of December 31, 2016.

Icahn Enterprises L.P. (NASDAQ:IEP), a master limited partnership, is a diversified holding company engaged in ten primary business segments: Investment, Automotive, Energy, Railcar, Gaming, 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 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 Icahn Enterprises L.P. and its subsidiaries. Among these risks and uncertainties are 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 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; risk related to our gaming operations, including reductions in discretionary spending due to a downturn in the local, regional or national economy, intense competition in the gaming industry from present and emerging internet online markets and extensive regulation; 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 necessarily 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,
 2017 2016
Revenues:(Unaudited)
Net sales$4,319  $3,548 
Other revenues from operations475  446 
Net loss from investment activities(130) (936)
Interest and dividend income29  42 
Other (loss) income, net(16) 27 
 4,677  3,127 
Expenses:   
Cost of goods sold3,737  3,123 
Other expenses from operations254  246 
Selling, general and administrative582  518 
Restructuring7  15 
Impairment8  577 
Interest expense223  241 
 4,811  4,720 
Loss before income tax expense(134) (1,593)
Income tax expense(26) (16)
Net loss(160) (1,609)
Less: net loss attributable to non-controlling interests142  772 
Net loss attributable to Icahn Enterprises$(18) $(837)
    
Net loss attributable to Icahn Enterprises allocable to:   
Limited partners$(18) $(820)
General partner  (17)
 $(18) $(837)
    
Basic and diluted loss per LP unit$(0.12) $(6.21)
Basic and diluted weighted average LP units outstanding149  132 
Cash distributions declared per LP unit$1.50  $1.50 


CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions)
    
 March 31,
2017
 December 31,
2016
ASSETS(Unaudited)  
Cash and cash equivalents$2,018  $1,833 
Cash held at consolidated affiliated partnerships and restricted cash1,007  804 
Investments10,087  9,881 
Due from brokers1,486  1,482 
Accounts receivable, net1,725  1,609 
Inventories, net3,067  2,983 
Property, plant and equipment, net10,136  10,122 
Goodwill1,165  1,136 
Intangible assets, net1,083  1,080 
Assets held for sale1,350  1,366 
Other assets1,065  1,039 
Total Assets$34,189  $33,335 
LIABILITIES AND EQUITY   
Accounts payable$1,883  $1,765 
Accrued expenses and other liabilities3,775  2,998 
Deferred tax liability1,617  1,613 
Securities sold, not yet purchased, at fair value2,192  1,139 
Due to brokers2,017  3,725 
Post-employment benefit liability1,188  1,180 
Liabilities held for sale1,738  1,779 
Debt11,212  11,119 
Total liabilities25,622  25,318 
    
Equity:   
Limited partners2,719  2,448 
General partner(289) (294)
Equity attributable to Icahn Enterprises2,430  2,154 
Equity attributable to non-controlling interests6,137  5,863 
Total equity8,567  8,017 
Total Liabilities and Equity$34,189  $33,335 

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 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)March 31, 2017 December 31,
2016
Market-valued Subsidiaries:(Unaudited)
Holding Company interest in Funds (1)$1,846  $1,669 
CVR Energy (2)1,430  1,808 
CVR Refining - direct holding (2)54  60 
American Railcar Industries (2)488  538 
Total market-valued subsidiaries$3,818  $4,074 
    
Other Subsidiaries:   
Tropicana (3)$981  $862 
Viskase (3)155  154 
Federal-Mogul (4)1,690  1,429 
Real Estate Holdings (1)638  642 
PSC Metals (1)169  155 
WestPoint Home (1)161  164 
ARL (5)1,699  1,689 
Ferrous Resources (1)109  104 
Icahn Automotive Group (1)1,301  1,319 
Trump Entertainment (1)28  86 
Total - other subsidiaries$6,932  $6,605 
Add:  Holding Company cash and cash equivalents (6)337  225 
Less:  Holding Company debt (6)(5,507) (5,490)
Add:  Other Holding Company net assets (7)163  171 
Indicative Net Asset Value$5,743  $5,585 

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, express 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.  Tropicana valued at 9.0x Adjusted EBITDA for the twelve months ended March 31, 2017 and 8.5x Adjusted EBITDA for the twelve months ended December 31, 2016. Viskase valued at 9.0x Adjusted EBITDA for the twelve months ended March 31, 2017 and December 31, 2016.

(4) March 31, 2017 represents the value of the company based on IEP's tender offer during Q1 2017.  December 31, 2016 represents the closing share price (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 December 31, 2016.

(5) Reflects the initial sale of ARL to SMBC Rail and assumes that the ARL cars not being sold to SMBC Rail during the initial closing are valued at the purchase price option set forth in the ARL sales agreement less liabilities.

(6) Holding Company's balance as of each respective date.

(7) Holding Company's balance as of each respective date. For March 31, 2017, the distribution payable was adjusted to $20 million, which represents the actual distribution paid subsequent to March 31, 2017.

($ in millions)Three Months Ended March 31,
 2017 2016
Consolidated Adjusted EBITDA:(Unaudited)
Net loss$(160) $(1,609)
Interest expense, net222  239 
Income tax expense26  16 
Depreciation and amortization243  230 
Consolidated EBITDA$331  $(1,124)
Impairment of assets8  577 
Restructuring costs7  15 
Non-Service cost US based pensions3  4 
FIFO impact unfavorable  9 
Major scheduled turnaround expense13  29 
Net loss on extinguishment of debt2   
Unrealized (gain) loss on certain derivatives(11) 23 
Other27  23 
Consolidated Adjusted EBITDA$380  $(444)
    
IEP Adjusted EBITDA:   
Net loss attributable to IEP$(18) $(837)
Interest expense, net168  169 
Income tax expense20  12 
Depreciation and amortization195  179 
EBITDA attributable to IEP$365  $(477)
Impairment of assets8  336 
Restructuring costs7  12 
Non-Service cost US based pensions3  3 
FIFO impact unfavorable  5 
Major scheduled turnaround expense8  17 
Net loss on extinguishment of debt2   
Unrealized (gain) loss on certain derivatives(6) 13 
Other25  21 
Adjusted EBITDA attributable to IEP$412  $(70)


($ in millions)Three Months Ended March 31,
 2017 2016
Consolidated Adjusted EBIT:(Unaudited)
Net loss$(160) $(1,609)
Interest expense, net222  239 
Income tax expense26  16 
Consolidated EBIT$88  $(1,354)
Impairment of assets8  577 
Restructuring costs7  15 
Non-Service cost US based pensions3  4 
FIFO impact unfavorable  9 
Major scheduled turnaround expense13  29 
Net loss on extinguishment of debt2   
Unrealized (gain) loss on certain derivatives(11) 23 
Other27  23 
Consolidated Adjusted EBIT$137  $(674)
    
IEP Adjusted EBIT:   
Net loss attributable to IEP$(18) $(837)
Interest expense, net168  169 
Income tax expense20  12 
EBIT attributable to IEP$170  $(656)
Impairment of assets8  336 
Restructuring costs7  12 
Non-Service cost US based pensions3  3 
FIFO impact unfavorable  5 
Major scheduled turnaround expense8  17 
Net loss on extinguishment of debt2   
Unrealized (gain) loss on certain derivatives(6) 13 
Other25  21 
Adjusted EBIT attributable to IEP$217  $(249)
Investor Contacts:
SungHwan Cho, Chief Financial Officer
Peter Reck, Chief Accounting Officer
(212) 702-4300