Good morning, welcome to the Icahn Enterprises L.P. Q1 2018 earnings call with Jesse Lynn, General Counsel, Keith Cozza, President and CEO, and SungHwan Cho, Chief Financial Officer. I would now like to hand over the call to Jesse Lynn, who will read the opening statement.
Thank you. 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, welcome to the first quarter 2018 Icahn Enterprises Earnings Conference Call. Joining me on today's call, SungHwan Cho, our Chief Financial Officer. I'll begin by providing some brief highlights. Sung will provide an in-depth review of our financial results and the performance of our business segments. We'll be available to address your questions. For Q1 2018, we had net income attributable to Icahn Enterprises of $137 million, or $0.77 per LP unit, compared to a net loss of $18 million, or $0.12 per LP unit in the prior year period. Adjusted EBITDA attributable to Icahn Enterprises for Q1 2018 was $551 million, compared to $421 million for Q1 of 2017. Our investment funds earned a return of 5.3% in Q1 of 2018, compared to a negative return of 2.7% for the prior year period.
Our positive performance in Q1 2018 was driven by net gains in our core long equity positions, as well as gains from single name and index short positions. We increased our net long exposure to 18% as of the end of Q1, compared to 14% at the end of 2017. Net sales and service revenues for our Automotive segment in Q1 of '18 were $2.7 billion, compared to $2.6 billion in the prior year period. The increase was primarily due to acquisitions at Icahn Automotive Group and favorable foreign exchange rates at Federal-Mogul. In our Energy segment, our Q1 2018 net sales were $1.5 billion, and consolidated adjusted EBITDA was $138 million. CVR Refining had a solid first quarter, led by strong crack spread, while CVR Partners results were hampered by some downtime at our East Dubuque facility.
In our Gaming segment, Tropicana delivered solid results for the quarter with strong performance at its Atlantic City, Evansville, and St. Louis properties. Subsequent to quarter end, we announced two transactions. First, we announced the sale of Federal-Mogul to Tenneco Inc. for a total transaction value of approximately $5.4 billion. All of Federal-Mogul's outstanding debt will be assumed by Tenneco. At closing, IEP will receive $800 million in cash and 29.5 million shares of Tenneco stock, valued at $1.6 billion at the time of announcement. Tenneco has the option to reduce the number of shares we receive at closing by 7.3 million shares and increase the cash consideration proportionately by $400 million. As a reminder, IEP acquired a controlling interest in Federal-Mogul in 2008.
Tenneco has announced its intention to separate the combined businesses into two independent, publicly traded companies that will establish an aftermarket ride performance company and a powertrain technology company. We believe the combination gives the pro forma companies the scale to compete effectively in these markets. We will be the largest shareholder post-close and have representation on the board. We would like to thank Rainer Jueckstock, Brad Norton, and the entire Federal-Mogul team for all their hard work and efforts creating value over the years. Second, we announced the sale of Tropicana Entertainment for approximately $1.85 billion in cash to Eldorado Resorts and GLPI. We acquired a controlling interest in Tropicana in 2010 after years of mismanagement and lack of capital investment in the properties. Since acquiring control, we installed a new management team and reinvested every single dollar of profits back into the business.
We'd like to thank Tony Rodio and the entire management team at Tropicana for their years of hard work to establish Tropicana as one of the most successful regional gaming companies in the United States. We expect both of these transactions to close in the second half of 2018, subject to various closing conditions. Both transactions are illustrative of our strategy at Icahn Enterprises, where we seek to acquire undervalued assets, nurture, guide, and improve their condition and operations, and ultimately develop them into more valuable businesses, which creates value for our unitholders. With that said, 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 2018, net income attributable to Icahn Enterprises was $137 million, compared to a net loss of $18 million in the prior year period.
As you can see on slide five, in Q1 2018, the performance of our investment funds was the primary driver of net income in the quarter. Adjusted EBITDA attributable to Icahn Enterprises for Q1 2018 was $551 million compared to $421 million in Q1 2017. I will now provide more detail regarding the performance of our individual segments. Our investment segment had a gain attributable to Icahn Enterprises of $161 million for Q1 2018. The investment funds had a positive return of 5.3% in Q1 2018 compared to a negative return of 2.7% for Q1 2017. Long positions had a positive performance attribution of 3% for the current quarter, while short positions and other expenses had a positive performance attribution of 2.3%. Since inception in November 2004 through the end of Q1 2018, the investment fund's gross return is 132%, or approximately 6.5% annualized.
The investment funds continue to be significantly hedged. At the end of Q1 2018, net long exposure was 18%, compared to net long exposure of 14% at the end of 2017, and net short exposure of 110% at the end of Q1 2017. IEP's investment in the funds was $3.2 billion as of March 31, 2018. Now to our energy segment. For Q1 2018, our energy segment reported revenues of $1.6 billion and consolidated adjusted EBITDA of $138 million, compared to revenues of $1.5 billion and consolidated adjusted EBITDA of $133 million for the prior period. CVR Refining had a solid first quarter performance led by strong crack spreads, hedging gains, a reduction to its RINs obligation, and lower RINs prices. CVR Refining reported Q1 2018 adjusted EBITDA of $126 million compared to $115 million in the prior year period.
Combined crude oil throughput was approximately 178,000 barrels per day for the quarter and was negatively impacted by an extended outage at our Coffeyville refinery. Refining margin adjusted for FIFO impact, a non-GAAP financial measure, was $13.77 per barrel in Q1 2018 compared to $11.54 per barrel in the prior year period. CVRR declared a distribution of $0.51 per unit for the quarter. CVR Partners reported Q1 2018 adjusted EBITDA of $13 million compared to $21 million for Q1 2017. CVR Partners' Coffeyville fertilizer plant performed extremely well during Q1 2018, posting on-stream rates close to 100%. While the Coffeyville plant performed well, operations at East Dubuque were interrupted by 12 days of unplanned downtime. Average prices for UAN and ammonia were $153 per ton and $322 per ton, respectively, in Q1 2018, compared to $160 per ton and $308 per ton, respectively, for the same period in 2017.
Management anticipates a strong application period with solid demand driven by lower than normal customer inventory levels and an estimated 88 million planted corn acres. Now turning to our automotive segment. Our automotive segment's Q1 2018 net sales and service revenues were $2.7 billion, up 6% from the prior year period. The increase is primarily due to sales and service volume increases from acquisitions as well as favorable effect of foreign currency exchange. Federal-Mogul, on a standalone basis, reported Q1 net sales of $2.1 billion compared to $2.0 billion in the comparable prior year period. The increase was due to favorable effect of foreign currency and higher OE sales, offset in part by lower aftermarket sales in the U.S. and EMEA. Operational EBITDA in Q1 2018 was $205 million, down $18 million from the prior year period.
At Icahn Automotive Group, Q1 2018 operating revenues were approximately $686 million compared to $637 million in Q1 2017. The increase was primarily due to 2017 acquisitions. Turning to our railcar segment. Our railcar segment had railcar shipments in Q1 2018 of 811 railcars, including 195 railcars to leasing customers, compared to 1,151 railcars for the prior year period, of which 602 railcars were to leasing customers. As of March 31, 2018, ARI had a backlog of 3,144 railcars, including 259 railcars for lease customers. According to the Railway Supply Institute, the railcar manufacturing backlog was approximately 55,000 railcars at the end of Q1 2018. 79% of the current industry backlog is comprised of tank cars and covered hopper cars, the two primary railcar types manufactured and leased by our railcar segment.
Total manufacturing revenues for Q1 2018 increased by $3 million or 5% as compared to the prior year period. The increase was primarily due to an increase in shipments to non-leasing customers. The segment's railcar leasing revenue declined in Q1 2018 as compared to the prior year, due to the sale of ARL in 2017. The lease fleet was 13,122 railcars at the end of Q1 2018, down from 46,335 railcars at the end of Q1 2017 due to the sale of the ARL railcars. Adjusted EBITDA attributable to IEP for the railcar segment was $23 million for Q1 2018, compared to $88 million in the prior year period. Turning to our gaming segment. Our gaming segment continues to perform well, with significant gains at core properties within Tropicana Entertainment.
For Q1 2018, Tropicana operating revenues increased by 3% from the prior year period, and consolidated adjusted EBITDA increased 9% to $49 million. These gains were primarily driven by the performance at the Evansville and St. Louis properties. Turning to food packaging. Net sales for Q1 2018 increased by $7 million or 8% compared to the prior year. The increase was primarily due to the inclusion of recent acquisitions. Consolidated adjusted EBITDA was $11 million in Q1 '18, which was $1 million below the prior year period. Gross margin as a percent of net sales was 24% for Q1 '18, which was consistent with the prior year. To our metals segment. Net sales for Q1 2018 increased by $15 million or 15% compared to the prior year.
The net sales increase was driven by higher selling prices and higher volumes for most product lines, with ferrous net sales accounting for a majority of the increase. Ferrous shipment volumes increased due to improved demand from domestic steel mills and improved flow of raw materials into the recycling yards, driven by increased market pricing. Adjusted EBITDA was $8 million in Q1 2018 compared to $7 million in the prior year period. Gross margin has improved due to continued focus on disciplined buying, higher pricing of non-ferrous auto residue, improved market pricing, and by continued efforts to bring processing costs in line with volume and market pricing. To our real estate segment. Real estate operating revenues were $17 million in Q1 2018, which was slightly down from the prior year period.
Revenue from our real estate operations for both Q1 '18 and Q1 '17 were substantially derived from income from club and rental operations. The real estate segment generated $15 million of adjusted EBITDA in Q1 2018. Turning to mining segment. Our mining segment has been concentrating on sales in Brazil. In Q1 2018, sales decreased to $20 million compared to $33 million in the prior year. Consolidated adjusted EBITDA was $1 million for Q1 '18 compared to $13 million in the prior year period. The decline in Q1 performance was due to declines in both iron ore price as well as volumes. Turning to our home fashion segment. Q1 2018, net sales for our home fashion segment were down 11% as compared to Q1 2017 due to lower sales volumes. Adjusted EBITDA was a loss of $1 million, which was consistent with the prior year period.
Gross margin as a percentage of net sales was 14% for Q1 '18 as compared to 15% for Q1 '17. 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 '18 with cash equivalents, our investment in the investment funds, and revolver availability totaling approximately $5.5 billion. Our subsidiaries have approximately $1.1 billion of cash and $1.1 billion of undrawn credit facilities to enable them to take advantage of attractive opportunities. In summary, we continue to focus on building asset value and maintaining ample liquidity to enable us to capitalize on opportunities within and outside of 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&A session. If you'd like to ask a question, please press star then one. If your question has been answered and you'd like to remove yourself from the queue, you may press the pound key. Our first question comes from Daniel Fannon of Jefferies. Your line is open.
Good morning. Just wanted to touch base on the two recent exits. With the cash that's going to be generated or coming into the firm, is the idea that it will mostly end up in the investment fund at this point, or how should we think about that going forward?
Yeah. Hi, Dan. Yeah, I think some will go to the holding company to kind of replenish holding company cash, and a good portion of it will
Will go into the investment segment. We're always on the lookout for additional tack on acquisitions at some of our existing segments. We're looking at a bunch of other stuff that could become new segments if the price is right. In a vacuum with nothing in the pipeline, it would go into the investment segment.
Understood. Then in terms of just where the general portfolio sits with the portfolio companies, obviously, you talked a little bit about there being the potential for some incremental investment. How should we think about just the overall strategy, maybe where things sit in the sense that, is everything for sale at the right price at this point? Obviously, there were no exits for some time, there's obviously a spate of them recently. How should we think about that? Then any color there that you can provide on the portfolio companies from a strategy perspective.
Yeah, sure. I think that's a fair statement what you made. At the right price, anything's for sale. That's not something new. That's something that's been part of our strategy for the last 20 years. The inconsistency in asset monetizations is really just a derivative of market multiples or market perceptions of value on our particular segments. Our strategy and job is to increase the value of our portfolio companies through a number of different means, whether it's tack on acquisitions, improving the cost structure, putting in the right management team, et cetera. We want to just keep improving value, whether we own it for 30 years or three years, we're somewhat indifferent. We're going to keep creating the value, at some point, market multiples get to a point where we think that's a fair exit price, and we'll monetize those assets.
It just happened that we've had a few over the last couple of years with Federal-Mogul, Tropicana, American Railcar Leasing, and the former Fontainebleau assets over the last 18 to 24 months. Prior to that, to your point, we've just been kind of operating the businesses for multiple year periods trying to create that value. It takes time. It's a long-term strategy. We don't live quarter to quarter. To summarize, yeah, I would agree with you. Everything's for sale at the right price. You'll see over the next few years. You look at the history of Icahn Enterprises over the last 20 years, we've sold segments, we've added new segments, and I expect that to continue. It's part of the model.
Fair enough. Maybe just a little bit more color. If I were to ask about the level of conversations that you guys have been having, would you say it's more than in the past at this point in terms of with others that maybe are looking to acquire those properties from you guys? Is it just there's a normalized level or it truly is just it's really dependent at a very specific point in time?
Yeah, it's just dependent. Obviously, we have general conversations regarding the industries we're in on a somewhat regular basis with the typical bankers and potential buyers and sellers, et cetera. We're always on the prowl looking for things. People are making inquiries to us, that's normal course. I don't think there's any kind of difference in level. It's just really a matter of, we just happened to connect with two transactions here where it made a ton of sense for both parties regarding Tenneco and Eldorado. It's what we would refer to as a win-win for both sides.
That's helpful. Maybe one more quick question on the investment fund. Can you provide us an update in terms of just the management strategy there? The question here is alluding to at one point, obviously, the Sargon portfolio was involved. I just wanted to understand where things are generally from a management perspective of the funds and the assets.
Yeah. Obviously, look, Carl is still the captain and is heavily involved in every investment decision. We have a deep bench of portfolio managers. We recently added Nick Graziano. Courtney Mather's been here for three or four years now. Brett Icahn is consulting with us on a number of different names. We have a number of other younger analysts as well that are all generating ideas. It all ties into the activist strategy. We've been pretty vocal about it over the last decade. At the end of the day, we have no idea where macro markets are going. We try to find undervalued situations where we can be the catalyst to unlock intrinsic value. We're finding some decent opportunities over the last so far this year. You've seen Newell Brands was one. We're in a little thing with SandRidge.
We're finding pockets of where we think the risk reward is skewed. We think we can play a role in unlocking some of that value. We're pretty optimistic about the current positioning of the portfolio. There's no shortage of idea generation amongst the management team.
Understood. That's helpful. That's it for me. Thank you.
Yep. Thanks, Dan.
Once again, if you'd like to ask a question, please press star then one. I currently have no more questions in queue.
Okay. Thanks very much, everybody. We'll look forward to speaking with you after the second quarter results. Thank you.