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Inside Icahn’s Largest Contributor to Revenues in 2Q16

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Dec. 4 2020, Updated 10:52 a.m. ET

Icahn Enterprises’ Automotive Segment

In 2Q16 Icahn Enterprises’ (IEP) Automotive segment was the largest contributor to the company’s overall revenue. The segment contributed 60% to IEP’s total revenues (excluding investments) and has an EBITDA (earnings before interest, tax, depreciation, and amortization) margin of 8.8%.

In 2Q16, IEP’s Automotive revenues increased by 19% over 1Q16 due to its Pep Boys acquisition in 1Q16 and its acquisition of the IEH Auto business in June 2015.

In 2Q16, the segment’s EBITDA stood at $229 million, up 10% as compared to $208 million in 1Q16. Its net profit stood at $42 million, up 50% as compared to $28 million in 1Q16.

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About Icahn’s Automotive segment

Icahn conducts its Automotive operations through a majority ownership in Federal-Mogul Holdings (FDML), Pep Boys, and IEH Auto Parts. FDML focuses on two businesses: power trains (original equipment) and motor parts (brakes, chassis, wipers, and other vehicle components).

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

Peer performances

IEP’s automotive competitors can be categorized on the basis of power train and motor parts. Players in the vehicular parts business include Delphi Automotive (DLPH), Auto Liv (ALV), and Wabco (WBC), which saw revenue rises of 9%, 12%, and 11%, respectively, in 2Q16 over 2Q15.

On a yearly basis from August 5, 2015, to August 5, 2016, IEP has declined by 26.2%, as compared to the 8.8% gain seen by the broad-based S&P 500 Index (SPY). On a year-to-date basis as of August 5, 2016, IEP has declined by 8.2%.

In next part, we’ll discuss Icahn’s purchase of the remaining shares of Federal-Mogul’s common stock.

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