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Icahn’s Automotive Segment: Biggest Revenue Contributor in 1Q16

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Icahn Enterprises’ automotive segment

In 1Q16, Icahn Enterprises’ (IEP) automotive segment was the largest contributor to the company’s overall revenue. The automotive segment contributed 60% to IEP’s total revenue (excluding investments). It has an EBITDA (earnings before interest, tax, depreciation, and amortization) margin of 8.9%.

In 1Q16, IEP’s automotive revenues increased by 19% on a quarterly basis from 4Q15, due to the inclusion of Pep Boys’ operations. During 1Q16, Icahn Enterprises completed the acquisition of all the outstanding shares of Pep Boys. In 1Q16, Pep Boys and IEH Auto Parts had a standalone revenue of $520 million.

The automotive segment’s EBITDA stood at $208 million, up by 23% from the $169 million in 4Q15. Meanwhile, net profit stood at $28 million, compared with a loss of $325 million in 4Q15.

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About Icahn’s automotive segment

Icahn conducts its automotive operations through its majority ownership in Federal-Mogul Holdings (FDML) and its wholly owned subsidiaries, Pep Boys and IEH Auto Parts. FDML focuses on two segments, the power-train business and the motor part business.

IEH Auto Parts is a distributor of aftermarket auto parts, primarily to auto service customers and wholesalers. Pep Boys is a retailer and distributor of aftermarket auto products and a provider of automotive service.

Icahn’s peers’ performance

IEP’s competitors in the vehicular parts space include Delphi Automotive (DLPH), Autoliv (ALV), and WABCO (WBC). These companies’ revenues grew by 12%, 16%, and -3%, respectively, between 1Q15 and 1Q16.

Up until May 5, 2016, IEP was down by 37.4% on a yearly basis, against a 3.1% drop for the broad-based S&P 500 (SPY). On a year-to-date basis, IEP was up by 5.9%. In the next part of this series, we’ll analyze Icahn’s energy segment’s performance in 1Q16.

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