Good morning, and welcome to the Icahn Enterprise LP Q1 2019 Earnings Call with Jocelyn, General Counsel Keith Toza, President and CEO and Sungwon Cho, Chief Financial Officer. As a reminder, this conference call is being recorded. I would like to hand the call over to Jeslyn, who will read the opening statement.
Thank you, operator. Good morning. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward looking statements we make in this presentation, including statements regarding our future performance and plans for our businesses and potential acquisitions. These forward looking statements involve risks and uncertainties that are discussed in our filings with the Securities and Exchange Commission, including economic, competitive, legal and other factors. Accordingly, there is no assurance that our expectations will be realized.
We assume no obligation to update or revise any forward looking statements should circumstances change except as otherwise required by law. 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 Chief Executive Officer.
Thanks, Jesse. Good morning, and welcome to the Q1 2019 Icahn Enterprises earnings conference call. Joining me on today's call is Sung Hwan Cho, our Chief Financial Officer. 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 Q1 2019, we had a net loss attributable to Icahn Enterprises of $394,000,000 or $2.02 per LP unit compared to net income of 132,000,000 dollars or $0.74 per LP unit in the prior year period. Adjusted EBITDA attributable to Icahn Enterprises for Q1 2019 was a loss of $194,000,000 compared to a gain of $325,000,000 for Q1 of 2018. Our investment segments had a negative return of 5.8 percent in Q1 2019 compared to a positive 5.3% for the prior year period. Our negative performance in Q1 2019 was driven by net losses in our short equity index positions, offset in part by net gains in our core long equity positions.
The investment funds are well positioned to withstand the market correction, finishing the quarter with a net short exposure of 43%. In our Energy segment, our Q1 2019 net sales were $1,500,000,000 and consolidated adjusted EBITDA was 230,000,000 dollars CVR Refining had a solid first quarter led by wide Brent WTI differentials, rising crude oil prices, hedging gains and lagging crude oil differentials. In Q1, CVR Energy purchased the remaining common units of CVR Refining, not already owned by CVR Energy, simplifying its capital structure. CVR Partners performance was impacted by weather conditions, which delayed the start of the spring fertilizer application. Net sales and service revenues for our automotive segment in Q1 2019 were $693,000,000 compared to $686,000,000 in the prior year period.
The increase was primarily due to higher automotive service revenues offset in part by a decrease in aftermarket part sales. As a reminder, Icahn Automotive Group is in the process of implementing a multiyear transformational plan to restructure the operations and improve profitability. This morning, we announced our intention to enter into an open market sales agreement to which IEP may sell depository units from time to time up to $400,000,000 in the aggregate sales proceeds. The proceeds from these transactions, if any, will be used to fund potential acquisitions and general limited partnership purposes. We also believe any potential sales will strengthen our credit profile, expand our unitholder base and improve daily trading liquidity.
We closed the quarter with a strong balance sheet and are actively seeking new investment opportunities. With that, let me turn it over to Sung.
Thanks, Keith. I will begin by briefly reviewing our consolidated results and then highlight the performance of our operating segments and comment on the strength of our balance sheet. In Q1 2019, net loss attributable to Icahn Enterprises was $394,000,000 compared to net income of $132,000,000 in the prior year period. Dollars 34,000,000 of net income from Q1 2018 was from discontinued operations. As you can see on Slide 5, in Q1 2019, the performance of our investment funds was the primary driver of our net loss for the quarter.
In addition, a decrease in the value of Tenneco stock received as a part of the Federal Mogul transaction in 2018 drove losses at our holding company level. Adjusted EBITDA attributable to Icahn Enterprises for Q1 2019 was a loss of $194,000,000 compared to a gain of $325,000,000 in Q1 2018. I will now provide more detail regarding the performance of the individual segments. Our Investment segment had a loss attributable to Icahn Enterprises of $295,000,000 in Q1 2019. The investment funds had a negative return of 5.8 percent in Q1 twenty nineteen compared to a positive return of 5.3% for Q1 twenty eighteen.
Long positions had a positive performance attribution of 7% for the current quarter, while short positions and other expenses had a negative performance attribution of 12.8%. Since inception in November 2004 through the end of Q1 2019, the investment fund's gross return is 124% or approximately 5.8 percent annualized. The investment funds continue to be significantly hedged. At the end of Q1 2019, net short exposure was 43% compared to a net short exposure of 24% at the end of 2018. IEP's investment in the funds was $4,800,000,000 as of March 31, 2019.
And now to our Energy segment. For Q1 2019, our Energy segment reported revenues of 1 point $5,000,000,000 and consolidated adjusted EBITDA of $230,000,000 Revenues were flat with the prior year, while adjusted EBITDA improved by $25,000,000 CVR Refining had a solid first quarter performance, led by wide Brent WTI differentials, rising crude oil prices, hedging gains and lagging crude oil differentials. The Wynnewood refinery also completed its planned maintenance turnaround safely and on time and under budget. CVR Refining reported Q1 2019 adjusted EBITDA of $209,000,000 compared to $192,000,000 in the prior year period. Combined total throughput was approximately 213,000 barrels per day for the quarter, which was 12% higher than the prior year period.
Refining margin per total throughput barrel was $16.55 in Q1 2019 compared to $17.58 per barrel in the prior year period. CVR Partners reported Q1 2019 adjusted EBITDA of $26,000,000 compared to $13,000,000 in Q1 2018. Increased profitability was driven by improved pricing with UAN pricing up 45% and ammonia pricing up 14% Q1 2018. Sales volume was impacted by weather conditions, which delayed the start of the spring fertilizer application. Demand, however, has picked up recently with the start of the spring application season.
Now turning to the Automotive segment. Q1 2019 net sales and service revenues for Icahn Automotive Group were 6 $3,000,000 up 1% from the prior year. The increase was attributable to higher automotive service revenues due to Linked to Informe and Fleet businesses. Overall, parts sales were flat with a positive 6% commercial same store sales comp offset by weakness in DIY retail sales. Adjusted EBITDA attributable to IEP for the automotive segment was a loss of $22,000,000 in Q1 2019 compared to a loss of $10,000,000 in the prior year period.
Profitability was lower due to expenses related to the transformation of the business and additional costs related to the investment in the commercial business. Now turning to our Food Packaging segment. Net sales for Q1 2019 decreased by $2,000,000 or 2% compared to the prior year period. The decrease was primarily due to lower sales volume and an unfavorable effects of foreign exchange. Consolidated adjusted EBITDA was $11,000,000 in Q1 2019, which was consistent with the prior year period.
Gross margin as a percent of sales was 21% for Q1 2019, which was also flat with the prior year. And now to our Metals segment. Net sales for Q1 2019 decreased by $25,000,000 or 21% compared to the prior year period. The net sales decrease was primarily due to lower volumes and lower average pricing for almost all product lines. Non ferrous shipment volumes continued to be impacted by the ongoing trade dispute with China.
Adjusted EBITDA was $2,000,000 in Q1 2019, which was $6,000,000 below the prior year period. And now to our Real Estate segment. Real Estate operating revenues were $21,000,000 in Q1 2019, which was $1,000,000 below the prior year period. Revenue from our real estate operations for both Q1 2019 and Q1 2018 were substantially derived from income from club and rental operations. The real estate segment generated $6,000,000 of adjusted EBITDA in Q1 2019.
Now turning to Home Fashion. Q1 2019 net sales for our Home Fashion segment were down 7% compared to the prior year. Adjusted EBITDA was a loss of $2,000,000 for the quarter compared to a loss of $1,000,000 in the prior year period. Gross margin as a percent of net sales was 15% for Q1 2019 as compared to 14% in Q1 2018. Now to our Mining segment.
Our Mining segment has been concentrating on sales in Brazil. The company has largely completed its investment to produce higher quality iron ore. The new production currently sells for significant premiums compared to the benchmark 62% ferrous iron ore. In Q1 2019, sales increased $15,000,000 compared to the prior year period, primarily due to iron ore price and volume increases. Consolidated adjusted EBITDA was $11,000,000 for Q1 2019, which was $10,000,000 higher than the prior year period.
As we announced in 2018, we entered into a definitive agreement to merge Ferrous Resources with a wholly owned subsidiary of Vale. Total consideration will be approximately $550,000,000 including indebtedness that will be repaid at closing. We expect this transaction to close during 2019. Now I will discuss our liquidity position. We maintain ample liquidity at the holding company and at each of our operating subsidiaries to take advantage of attractive opportunities.
We ended Q1 2019 with cash, cash equivalents, our investment in the funds and revolver availability totaling approximately $8,100,000,000 Our subsidiaries have approximately $600,000,000 of $600,000,000 of undrawn credit facilities to enable them to take advantage of attractive opportunities. In summary, we continue to focus on building asset value and maintain ample liquidity to enable us to capitalize on opportunities within and outside our existing operating segments. Thank you. Operator, can you please open the call for questions?
Thank you. We'll now take questions as part of our Q and A session. First question from the line of Dan Fannon from Jefferies. Your line is open.
Thanks. Good morning, guys. So I just wanted to talk about the environment. I mean, you talked about being over 40% net short in the fund, but also on the market for new investment opportunities. So just want to get I mean, is it valuation where you're concerned just over the overall market or are there certain sectors that you're a little more bearish on?
I know historically you've your shorts have been in high yield or other areas or certain asset classes. So just kind of want to get a broader sense of kind of your outlook.
Sure. Hey, Dan, it's Keith. I would describe it as we're pretty cautious on overall market multiples. Again, a lot of our hedging activities are through broad based market indices like the S and P 500. So from that perspective, we obviously have a cautious outlook on the market overall.
I would hope, but at the same time picking and trying to find our spots where we think there is undervalued situations. I mean you saw in the Q1, this is all publicly disclosed, but we deployed over $1,500,000,000 into the Caesars investment. It's a
versus
the comps. And so we're that's just an example, but we're not afraid to deploy capital in certain situations. But overall, just from a market perspective, we're positioning the portfolio fairly conservatively. It's been a very long bull market run here, approaching 10, 11 years and these things typically don't last forever.
Yes. That makes sense. And I guess just in terms of the process and how you guys have gone through and cycled through investments previously from the fund to kind of separate category, separate segments. Is there any different is there any change in strategy? So anything if we think about the evolution of the segments and adding of a new one potentially, should it all still manifest originally in the fund and then potentially become a wholly owned separate subsidiary?
Yes. I think the way to look at it is that simplistically put in non controlling positions, which in our mind are typically less than 50% ownership or lower are going to originate in the fund. And but to the extent where we obtain control or go or by the full company, that's when it basically gets moved out of the fund and becomes its own operating segment. I think of it more of like the investment segment is the 10% positions of the world. And once we kind of buy majority control of the company, which is 51% to 100%, it shifts more to a private equity model where we're running the whole company and that's when it gets its own segment.
Got it. Okay. That's all my questions. Thanks.
Okay. Thanks, Dan.
Our next question comes from the line of Robert Sullivan from Mediochen. Your line is open.
Open market sales of stock, in terms of how you're thinking about that? Is it to improve the liquidity of the stock? Is it to give yourself more flexibility on the investment side for control and non control investments? Is it to delever? You guys are obviously sitting on a lot of cash right now, so it was a little curious in terms of what your intention was
there? Yes, sure. I think a number of the reasons you stated are valid. So from building an even bigger war chest, we obviously endeavor to have as much firepower as possible and could be used for potential acquisitions, new investments. But broadly speaking, there can be there's no assurances that we'll actually sell all of that stock or we're going to be very judicious about it.
But we also think, hey, it further improves the credit profile and we're certainly looking to and we're certainly looking to
expand our investor base as
well as improve the daily liquidity of the underlying trading volumes. So we think it ultimately can lead to positives to all of that.
Got you. And why wouldn't you just engage in kind of a normal stock sale process, I guess, in terms of how you you've done in the past in terms of offering in a more traditional offering?
Well, I think we evaluate all the methodologies to effectively raise capital. And we think this is a better path to give us more optionality. We don't think we don't want to to in a traditional offering, I think you'll have to sell the stock at some discount. And we like the flexibility of this. So we don't think the stock should be sold at a discount.
The stock is paying an $8 a year dividend. It trades under $80 So obviously, by definition, mathematically, that's a greater than a 10% yield. And if it trades lower, we like having the optionality of not selling stock. And if it trades at what we think is a fair entry point or fair level to raise capital, we may sell some stock. But doing it the traditional way generally historically required a large discount.
We were willing to do that in years past in order to get some float out there and try to improve the liquidity, but this we think is a better option for all unitholders.
Okay. Thanks. And final question on your 6% notes, call steps down August 1. Just wondering if you could give us a little, just in terms of how you're thinking about that? Thanks.
We're aware that they stepped down August 1st. No internal decisions have been made, but I can obviously certainly commit that they will be paid back sometime between I don't expect them to be paid down earlier than August 1st given the call premium, but obviously they'll be paid down sometime between August 1st and maturity.
Okay. Thank you very much.
You're
welcome.
I currently have no more questions in queue.
Okay. Thanks, everybody. We'll look forward to talking to you about second quarter results. Have a good day.