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Icahn Enterprises: Which Segments Were Its Major Earners in 1Q16?

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Icahn Enterprises’ segmental revenues

Icahn Enterprises’ (IEP) businesses are managed on a decentralized basis. Each of its ten operating segments has an impact on IEP’s revenues, growth, and profitability. The automotive, railcar, gaming, and home fashion segments’ revenues grew between 1Q15 and 1Q16, by 26%, 16%, 13%, and 6%, respectively.

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Icahn Enterprises: Segmental growth in 1Q16

  • Icahn’s automotive segment (FDML) revenues increased by 26% to $2.3 billion in 1Q16, from $1.8 billion in 1Q15. The increase was largely driven by the valve train business acquisition, along with strong US and Canadian domestic aftermarket sales. The 1Q16 results include only two months of Pep Boys’ operations, since the acquisition happened at the beginning of February 2016. We’ll discuss Icahn’s automotive segment further in part five.
  • The railcar segment reported $256 million in revenues in 1Q16, compared with $220 million in 1Q15, a 16% increase. This increase was due to a higher number of railcars leased. American Railcar Industries (ARII) declared a quarterly cash dividend of $0.40 per share.
  • Gaming revenues were up 13% to $218 million in 1Q16, compared with $193 million in 1Q15. Higher gaming volumes from the Tropicana casino (due to competitors’ closure), in addition to the Trump Taj Mahal acquisition, resulted in higher revenues.
  • The home fashion segment, which manufactures, markets, and sells its own brands and others’, witnessed a 6% rise in revenues. Its revenues stood at $50 million in 1Q16, compared with $47 million in 1Q15. This can be attributed to higher sales volumes due to streamlining the merchandising, sales, and customer service division.

ETF investments

Icahn Enterprises forms part of the Global X SuperDividend US ETF (DIV). Investors will benefit if IEP shows strong operating performance in 2016 and continues paying dividends. ClubCorp Holdings (MYCC), Covanta Holding (CVA), and Staples (SPLS) are among the top ten holdings of the fund, accounting for 2.4%, 2.3%, and 2.1%, respectively. Let’s see what’s happening with Icahn Enterprises in other segments.

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