Icahn Enterprises, L.P. (NASDAQ:IEP) Q3 2018 Earnings Conference Call Transcript

Nov 08, 2018 • 10:00 am ET

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Icahn Enterprises, L.P. (NASDAQ:IEP) Q3 2018 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Good morning, and welcome to the Icahn Enterprises L.P. Q3 2018 Earnings Call with Jesse Lynn, General Counsel; Keith Cozza, President and CEO; SungHwan Cho, CFO.

I would now like to hand over the call to Jesse Lynn, who'll read the opening statement.

Executive
Jesse Lynn

Thank you, operator.

(Forward-Looking Cautionary Statements)

This presentation also includes certain non-GAAP financial measures. A reconciliation of such non-GAAP financial measures to the most directly comparable GAAP financial measures can be found in the back of this presentation.

I'll now turn it over to Keith Cozza, our CEO.

Executive
Keith Cozza

Thanks, Jesse. Good morning, and welcome to the Third Quarter 2018 Icahn Enterprises Earnings Conference Call. Joining me on today's call is SungHwan Cho, our CFO. I will begin by providing some brief highlights. Sung will then provide an in-depth review of our financial results and the performance of our business segments. We will then be available to address your questions.

For Q3 2018, we had net income attributable to Icahn Enterprises of $126 million or $0.68 per LP unit compared to net income of $597 million or $3.53 per LP unit in the prior year period. Net loss attributable to Icahn Enterprises from continuing operations for Q3 2018 was $29 million or $0.16 per LP unit compared to net income of $577 million or $3.41 per LP unit in the prior year period. Adjusted EBITDA attributable to Icahn Enterprises for Q3 2018 was $26 million compared to $345 million for Q3 of 2017.

Subsequent to quarter-end, we closed on our previously announced sales of both Federal-Mogul and Tropicana Entertainment. We sold Federal-Mogul to Tenneco for $800 million in cash and 29.5 million shares of Tenneco common stock. All of Federal-Mogul's outstanding debt at the time of closing was assumed by Tenneco. We sold Tropicana's real estate to Gaming and Leisure Properties, Inc. and merged Tropicana's gaming and hotel operations into Eldorado Resorts, Inc. for an aggregate consideration of approximately $1.85 billion. The transaction did not include Tropicana's Aruba assets, which were acquired by a subsidiary of IEP prior to closing.

Subsequent to quarter-end, we also entered into a definitive agreement to merge our majority-owned subsidiary, American Railcar Industries, with a wholly-owned subsidiary of ITE Rail Fund L.P. at a price of $70 per share in cash. IEP's investment in ARI has generated a total return of 423% for a profit of approximately $757.2 million.

Our investment fund had a negative return of 6.3% in Q3 2018 compared to positive 5.1% for the prior year period. Our negative performance in Q3 was driven by net losses in our short equity index positions, offset in part by net gains in our core long equity positions.

Net sales and service revenues for our Automotive segment in Q3 2018, which excludes the operating results of Federal-Mogul, were $735 million compared to $700 million in the prior year period. The increase was primarily due to acquisitions at Icahn Automotive Group as well as organic sales growth in the commercial and service businesses.

In our