Good morning, and welcome to the Icahn Enterprises LP Q4 2017 Earnings Call with Jesse Lin, General Counsel Keith Cozza, President and CEO Sung Lan Cho, Chief Financial Officer. I would now like to hand the call over to Jesse Lin, who will read the opening statements.
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 GAAP financial measures can be found in the back of this presentation. I'll now hand it over to Keith Cozza, our Chief Executive Officer.
Thanks, Jesse. Good morning, and welcome to the Q4 2017 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. Net income attributable to Icahn Enterprises for 2017 was a record $2,400,000,000 or $14.80 per LP unit compared to a net loss of $1,100,000,000 or $8.07 per LP unit in 2016. For Q4 2017, net income attributable to Icahn Enterprises was $298,000,000 as compared to a net loss of $206,000,000 in the prior year period. Adjusted EBITDA attributable to Icahn Enterprises for 2017 was $1,700,000,000 compared to approximately $842,000,000 in 2016. Our investment funds had a negative return of 4.2 percent in Q4 of 2017, bringing our total return for the full year 2017 to a positive 2.1%.
Was significantly impacted by losses from our short equity and short credit positions. These were partially offset by gains in our long core equity positions. We rebalanced our short equity positions during the Q4 in anticipation of tax reform legislation. We increased our net exposure to positive 14% as of year end compared to negative 77% at the end of the third quarter. Net sales and service revenues for our automotive segment in Q4 2017 were $2,600,000,000 compared to $2,400,000,000 in the prior year period.
The increase was primarily due to sales volumes at Federal Mogul, acquisitions at ICON Automotive Group and favorable foreign exchange rates. In ICON Automotive Group, we continue to make acquisitions of auto service centers and maintain an active pipeline of additional acquisition opportunities. On October 2, we acquired American Driveline Systems or ADS. ADS is the franchiser of Ampco and Cotman Transmission and Total Auto Care Service Centers with approximately 680 locations. With the addition of ADS, Icahn Automotive Group operates approximately 1900 owned and franchised locations.
In our Energy segment, our Q4 2017 net sales were $1,600,000,000 and consolidated adjusted EBITDA was 81,000,000 dollars CVR Refining had a solid 4th quarter led by strong crack spreads and record operating rates, while CVR Partners results were hampered by continued low U. S. Nitrogen fertilizer pricing. In our railcar segment, we sold approximately 4,000 railcars for $522,000,000 relating to the previously announced sale of American Railcar Leasing to SMBC Rail. This resulted in a $154,000,000 gain in Q4.
In our Gaming segment, Tropicana delivered solid results for the quarter and the full year with strong performances at its Atlantic City, Evansville and St. Louis properties. In December, IEP successfully refinanced its senior notes coming due in 2019 with new senior notes due in 2025 as well as an add on to our 6.25% senior notes due in 2022. 2017 was an active year highlighted by the sale of American Railcar Leasing and the former Las Vegas Fountain Blue project, resulting in significant gains for our unitholders. We saw improving performance in many of our operating segments and the indicative net asset value of
IEP
increase our quarterly distribution by 17% to $1.75 per unit or $7 per unit on an annualized basis. 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 then comment on the strength of our balance sheet. In Q4 2017, net income attributable to Icahn Enterprises was $298,000,000 compared to a net loss of $206,000,000 in the prior year period. Full year net income attributable to Icahn Enterprises for 2017 was $2,400,000,000 or $14.80 per LP unit compared to a net loss of $1,100,000,000 or $8.07 per LP unit in the prior year period. As you can see on Slide 5, Q4 2017 IEP had net income of $298,000,000 compared to a net loss from the prior year.
Had tax benefits of approximately $500,000,000 which were related to the recent tax changes that were enacted in Q4 of 'seventeen. Adjusted EBITDA attributable to Icahn Enterprises for Q4 'seventeen was $167,000,000 compared to 145,000,000 dollars in Q4 'sixteen. For the full year 2017, we had net income attributable to IEP of $2,400,000,000 compared to a net loss of $1,100,000,000 in 2016. IEP recorded approximately $2,200,000,000 of gains from the sale of ARL and real estate properties in 2017. IEP also had positive performance in the investment funds compared to a loss in the prior year.
Adjusted EBITDA attributable to Icahn Enterprises for 20 17 was $1,700,000,000 compared to $842,000,000 in 2016. I will now provide more detail regarding the performance of our individual segments. Our Investment segment had a loss attributable to Icahn Enterprises of $132,000,000 for Q4 2017 and a gain of $80,000,000 for the full year. The investment funds had a loss of 4.2% in Q4 2017 compared to a 8.7% loss for Q4 2016. Long positions gained 9% for the current quarter, while short positions and other expenses had a negative performance attribution of 13.2%.
For the full year 2017, the Investment segment had a gain of 2.1% compared to a 20.3% loss in 2016. Long positions had a 5.4% gain for the full year 2017, while short positions and other expenses had a negative performance attribution of 3.3%. Since inception in November 2004 through the end of 2017, the investment funds gross return is 120 and 2017, the funds were net long 14% compared to net short 128% at the end of 20 16 and net short 77% at the end of Q3 2017. In Q4 2017, we invested an additional $300,000,000 into the funds and our investment in the funds was $3,000,000,000 as of December 31, 2017. And now to the Energy segment.
For Q4 2017, our Energy segment reported net sales $43,000,000 for the prior year period. CVR Refining had a solid 4th quarter led by strong crack spreads and record operating rates, while CVR Partners results were hampered by continued low U. S. Nitrogen fertilizer pricing. For the full year 2017, the Energy segment reported net sales of $6,000,000,000 and consolidated adjusted EBITDA of $429,000,000 compared to sales of $4,800,000,000 and consolidated adjusted EBITDA of $313,000,000 for 2016.
CVR Refining reported Q4 2017 adjusted EBITDA of $76,000,000 compared to $28,000,000 in the prior year. Stronger crack spreads and record operating rates resulted in overall solid results for CBR Refining in Q4. Refining margin adjusted for FIFO impact, a non GAAP financial measure, was $18.87 per barrel in Q4 2017 compared to $7.32 per barrel in the prior year period. CBR Partners reported Q4 2017 adjusted EBITDA of $8,000,000 compared to $18,000,000 in Q4 'sixteen. Q4 results were impacted by lower prices for nitrogen fertilizer.
Average prices for UAN and ammonia were $132 per ton and $2.64 per ton, respectively, in Q4 20 17 compared to $147 per ton $3.52 per ton, respectively, for the same period in 'sixteen. So far in 2018, we have seen lower nitrogen product imports, steady customer demand and increasing prices for nitrogen. Now turning to Automotive segment. Our Automotive segment's Q4 17 net sales and service revenues were $2,600,000,000 up 10% from the prior year period. The increase is primarily due to organic sales volume increases, sales and service volume increases from acquisition as well as favorable effect of foreign currency exchange.
Net sales and service revenues for the full year 2017 were $10,400,000,000 or 6% above 2016 results. Federal Mobile on a stand alone basis reported Q4 net sales of $2,000,000,000 compared to $1,800,000,000 in the comparable prior year period. The increase was due to higher OE sales, higher aftermarket sales in North America and Asia and favorable foreign currency exchange. Operational EBITDA in Q4 2017 was $219,000,000 up $37,000,000 from the prior year. At ICON Automotive Group, Q4 2017 operating revenues were approximately $692,000,000 compared to $638,000,000 in Q4 'sixteen.
As Keith mentioned, in October, we acquired American Driveline Systems, the franchisor of Ampco and Cotton brands, which are the number 1 and number 2 transmission repair brands in North America. This transaction built on our acquisitions of Just Brakes in January and Precision Auto Care in July and continues our path to becoming one of the largest auto service networks in the U. S. Now turning to Railcar. Our Railcar segment had railcar shipments in 2017 of 4,000 222 railcars, including 1804 railcars to leasing customers compared to 4,721 railcars for the prior year period, of which 799 railcars were to leasing customers.
As of December 31, 2017, ARI had a backlog of 19 40 railcars, including 389 railcars for lease customers. According to the Railway Supply Institute, the railcar manufacturing backlog has decreased from a record level of nearly 143,000 railcars at the end of 14, down to approximately 58,000 railcars at the end of Q4 'seventeen. 81% of the current industry backlog is comprised of tank cars and covered hopper cars, the 2 primary railcar types manufactured and leased by our railcar segment. Total The decrease was due to fewer shipments to non leasing customers and an overall decrease in the average selling prices due to more competitive pricing for both hopper and tank railcars. The segment's railcar leasing revenue declined in 2017 as compared to the prior year due to the sale of ARL.
Our remaining railcar lease fleet consists primarily of railcars owned by ARI. Proceeds from the ARL sale were $1,800,000,000 resulting in a pretax gain of $1,700,000,000 recorded by our railcar segment. Adjusted EBITDA attributable to IEP for the Railcar segment was $223,000,000 in 20 17 compared to $379,000,000 in the prior year period. Now turning to Gaming segment. Our Gaming segment continues to perform well with significant gains at core properties within Tropicana Entertainment.
For 2017, Tropicana operating revenues increased by 6% from the prior year, and consolidated adjusted EBITDA increased 30% to $192,000,000 These gains were primarily driven by performance in Atlantic City and St. Louis. Tropicana maintains a strong balance sheet having repaid $150,000,000 of debt and repurchased $36,000,000 of stock in the second half of twenty seventeen. Even after these transactions, the company still maintains ample liquidity with $103,000,000 of cash compared to $137,000,000 of debt. Within Trump Entertainment, losses have been reduced due to the sale of Trump Taj Mahal in Q1 2017.
We still hold the idle Trump Plaza location and continue to evaluate our options. Now turning to Food Packaging. Net sales for 2017 increased by $63,000,000 or 19% compared to the prior year period. The increase was due to higher sales volumes, primarily from acquisitions, offset in part by unfavorable price and product mix and foreign currency exchange. Consolidated adjusted EBITDA was $62,000,000 in 20 17, which was $7,000,000 above the prior year period.
Gross margin as a percentage of net sales was 24% in in 2017, which was consistent with the prior year period. And now to our Metals segment. Net sales for 2017 increased by $142,000,000 or 53% compared to the prior year. The net sales increase was driven by higher selling prices and higher volumes for most product lines. Ferrous shipment volumes increased due to improved demand from domestic steel mills and improved flow of raw materials into our recycling yards, driven by the increased market pricing.
Nonferrous shipment volumes increased primarily due to the investment in aluminum processing facilities at one of our facilities. Adjusted EBITDA was a positive $20,000,000 in 20.17 compared to a loss of $15,000,000 in the prior year. Gross margin has improved due to a continued focus on disciplined buying, higher pricing for non ferrous auto residue, improved market pricing and by continued efforts to bring and costs in line with volume and market pricing. Now to Real Estate. Real estate operating revenue was $87,000,000 in 20.17, which was in line with the prior year period.
In Q4 2017, we sold 2 more net leased properties for $55,000,000 generating a gain of 37,000,000 This is in addition to the sale of the former Fonten the Fonten Blue Las Vegas property for $600,000,000 in Q3 'seventeen, which generated a gain of $456,000,000 The Real Estate segment generated $47,000,000 of adjusted Mining segment has been concentrating on sales in Brazil. In Q4 2017, sales decreased to $18,000,000 compared to $22,000,000 in the prior EBITDA was breakeven for Q4 2017 $22,000,000 for the full year 2017. This decline in Q4 performance was due to a lower net realized price as a result of lower prices for iron ore and higher discounts on impurities. Ferrous has adjusted its production to minimize these discount and maximize its prices. Now turning to home fashion.
2017 net sales for our home fashion segment were down 6% as compared to 2016 due to lower sales volumes. Adjusted EBITDA was a loss of $9,000,000 compared to a loss of $1,000,000 in the prior year. Gross margin as a percentage of net sales was 11% for 2017 as compared to 14% in 2016, with the decrease primarily due to sales mix and inventory obsolescence. 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 Q4 2017 with cash, cash equivalents and our investment in the investment funds and revolver availability totaling approximately $5,800,000,000 Our subsidiaries have approximately $1,200,000,000 of cash and $1,100,000,000 of undrawn credit facilities to enable them to take advantage of attractive opportunities. In summary, we continue to focus on building asset value and maintaining ample liquidity to enable us to capitalize on opportunities within and outside of our existing
you. We'll now take questions as part of our Q and A session. Your first question comes from the line of Adam Gee from Mangrove. Go ahead please. Your line is open.
Hi. This is Nathaniel on for Adam. Thank you for taking my questions today. My first question is that it appears that within the hedge fund, you've made a pretty substantial shift in terms of your net exposures. And I was hoping you could comment on why that shift has been made and how you're thinking about what risks you're taking now as opposed to what you were taking a year ago?
Sure. Hi, this is Keith. And yes, and so I think the biggest component of that shift is as we ended the Q3 at about negative 7%, which was obviously very short. And leading into the Q4, I think Carl had a constructive view that was frankly ahead of the curve related to the probability of tax reform getting passed and what that would ultimately mean for the economy and earnings in the S and P 500. And we aggressively covered some of these hedges, which it's all hindsight, but that wound up saving the funds multiple 100 of 1,000,000 of dollars obviously doing that.
So it was really strictly driven by that view in the Q4. We ended the year at positive 14%, which is I assume you understand that longs and shorts are fairly balanced there. So I think we're cautious. I feel like we're always cautious, but I would say that this tax reform will have a significant earnings uplift on most public companies over the next couple of years. With that being said, we're cognizant of valuations being at all time highs.
And so we're trying to keep it pretty balanced. But I think that was rebalancing effectively.
And within your short portfolio, does that remain mostly CDS or is that index options and to the extent it's options, are you measuring that on notional or are you measuring that on a delta adjusted basis?
No. First of all, it's pretty much majority of our hedging activity is Delta 1, and we always measure on a notional basis on the equity side of things. When it comes to credit hedging, we obviously perform various adjustments, given that it wouldn't it would dramatically overstate the net exposures on a credit basis if you didn't kind of adjust if you just use notional. So but equity is primarily Delta 1. If we do layer in options against it, then we would Delta adjust those.
Okay. Thank you. My next question is there's been a volatile start to the year and I noticed that some of this larger investment in the portfolio have moved pretty significantly. Could you update us on investment returns through the 1st 2 months of the year?
Yes. We don't provide mid quarter guidance or anything. All I'll say is that we feel very good about how we have the portfolio position.
Okay. And my final question is that when I look at the automotive segment that you report and I try to disaggregate Icon Automotive from Federal Mogul, it appears that EBITDA has turned negative within Icon Automotive. So I was wondering if you could comment on the performance of Icon Automotive and then how you're thinking about the roughly $1,700,000,000 of equity value that you're attributing to that to the extent that I'm correct that EBITDA has turned negative? Sure,
sure. So, you are correct that EBITDA was negative at Icon Automotive Group in 2017. It was a significant restructuring year. Just to give you a kind of quick recap of the year, Q1 of 2017 same store sales were dramatically falling probably in the 5% to 7% negative same store sales range. We aggressively swapped out the management team, bringing in a number of new talented executives to basically turn the top line around, and they did that.
So Q2 went to flat, Q3 went to or Q2 was maybe negative 1%, Q3 was flat roughly and Q4 was positive same store sales. So the top line is now and the New Year is off to a very good start on a top line basis. And so in stabilizing the top line revenue growth in 2017, it required a number of initial spending that you need to do first in order to get the sales. And so there is a lag effect on that. And so a lot of those costs are captured in 2017, which kind of don't paint the full picture of a normalized run rate basis.
But the bottom line for 2,000 so two comments. When you say how do we evaluate it at $1,700,000,000 that's the book value of the company, okay, on a GAAP basis and we feel real good about that in the I assume you're referring to the NAV statement. And secondly, for 2018, now that we have top literally growing, we're now in there basically optimizing the cost structure and to turn all these sales into profitability.
Thank you very much.
You're welcome.
Your next question comes from the line of Seth Basham from Wedbush. Go ahead please. Your line is open.
Good morning and thanks for taking my question. I wanted to follow-up on the auto segment, if you don't mind. Trying to understand a little bit more what types of moves you made to restructure that business in 2017? And what gives you confidence that we'll see continued growth in 2018? As a follow-up, could you provide a little bit more thought as to the vision for the auto segment going forward?
That would be really helpful.
Sure, sure. Thanks. Yes, so I guess what some of the initiatives besides replacing out significant members of the management team, significant regional directors, area directors, etcetera, and really upgrading the talent. The number one thing we did was invest in inventory to dramatically expand our parts availability on the store side to grow the commercial business. The commercial business is where the future is at, as I'm sure you know.
And frankly, having the parts inventory helped stabilize the DIY business, which industry wide is probably a flat to moderate plus 1, minus 1 type business going forward. So investing in the we dramatically grew the commercial business by investing in the inventory, I'd say, double digit same store sales growth as we implemented all these commercial programs. As far as on the service side, again, it was getting the right rightsizing the labor, making sure we had the store the service centers appropriately staffed, with the appropriate number of technicians on the right days, etcetera. And also having the parts availability ties into that as well, leads to better customer service, leads to lower out buys and higher profitability in the service segment.
Thanks. And as you look forward to the future over the next 3 to 5 years, where do you see this business going?
Well, again, our number one our main focus right now is really we're up to about just under 2,000 repair shops across all of our different brands. And this industry the industry has 260,000 repair shops in the U. S. And we're a top 5 right now at 2,000. So obviously, it's a very fragmented industry and we're aggressively trying to consolidate it.
So I think 5 years from now, you're going to see us having dramatically more repair shops, as we roll them up or expand either through acquisitions or greenfields. But our goal look, it's not easy, otherwise somebody would have already done it. It's a great opportunity to have a national brand with 10,000 locations. We have a long way to go, but that's our goal. That's where our number one focus is, is on expanding the service centers.
Thank you very much.
Your next question comes from the line of Dan Fannon from Jefferies. Go ahead please. Your line is open.
Good morning. I'd like to start with a question about the investment fund. Just touching earlier on the question about volatility, given that there has been a lot more volatility to start the year, does that potentially change your view on maybe the positioning or how you might be thinking about it? Any color there would be helpful. In that sense, how quickly can you given that you use index options on the equity side, how quickly can you go from your current position, let's say, back to where you were in 3Q?
Sure. Hey, Dan. I would first of all, as far as if we wanted to go back to negative 77%, you can do that over the course of literally a day or 2. I mean, we're talking S and P 500. These are extremely large in liquid markets.
So as far as pivoting from the hedging point of view and moving the exposures around, that can be done very quickly. As far as volatility goes, it doesn't really change the way we look at the way Carl and the team looks at the investing process. I mean, it's we're not we've said this over the years, we're not traders, right? So although I get it, it makes for a good news story with stock prices moving up and down I mean, much bigger moves versus the last few years, it doesn't really affect us on the the strategy is the same as activist investors and you'll see some new names coming out in the news, maybe you've already even seen today. And as activist investors, look, we're going to look to unlock the value in certain long positions that we feel confident we could be the catalyst to bridge the gap between current trading value and the ultimate intrinsic value.
And but at the same time, we have no idea where the market's going. Carl's openly said, no one can predict where the market's going. And so we try to hedge out as much macro risk as we can.
Understood. And then maybe just touching base on the automotive business again. You talked about it as the strategy here is the consolidating play a highly fragmented industry. But as we look out longer term, how does the change in the backdrop if we get to more electric vehicles, where theoretically the demand for repair and those kinds of things is going to be less. Is part of the play on an aging fleet of existing cars at this point?
Or is there a bigger macro risk that, let's say, electric usage of vehicles grows a lot faster than maybe people are anticipating?
Yes, I don't think we agree with the risk related to electric as far as the effects on the repair business. Just to give you a little bit more color, the biggest categories of repairs that we are performing on a daily basis are tires, batteries, brakes, alignments.
And as
far as I last time I checked, every single one of those categories is still going to be involved with I assume electric vehicles are going to have wheels and brakes, right? And so from that perspective, we feel good. Would it lead to a little bit less under the hood engine work? Of course, obviously, the engine electric vehicles don't have combustible engines. But the other point I would make there is that's not a huge part of our existing repair business right now.
And at the same time though, I would tell you the existing car fleet and electrics penetration, we don't subscribe to some of the estimates out there of how quickly that's going to switch over. You've got multiple 100 of millions of bars in the U. S. Here that are not going to switch to that are going to require repairs for the next 10 to 12 years.
That's helpful. And then maybe just a bigger picture question here. In some of the segments, whether we look across this case or the home fashion business or some others, you've been involved with these segments for quite some time. They've tended to be perhaps more in an extended turnaround mode or perhaps flattish in terms of their growth profiles. What is the kind of the playbook here at this point?
Is there a decision that's consciously being made that you guys are just simply being patient and waiting for a more perfect exit opportunity? Or is it better to maybe exit those businesses or whichever ones by design and then better allocate the capital elsewhere? Are those businesses really the best place to have that capital locked up?
Yes. So it's a good question. I don't so we're not capital constrained. So maybe that's part of the reason that we don't really I understand what you're saying. That's not exactly how we look at it because it's not like we're not making other investment opportunities because we continue to hold 1 of the smaller segments that is kind of still being operated for improvement.
So that's one thing I would just say, there's not really we're not facing a ton of opportunity cost here. But with that being said, I think our goal is look, I mean, we're always evaluating buying additional businesses, selling businesses and improving what we have. And I think a bunch of them that we've had for a long time, obviously, by the fact that we're still holding them, we believe that we can create more value over the long term by continuing to make operational improvements, potential tack on acquisitions, potential restructurings or whatever the case may be that will lead to more there's not a scenario where I could sell something today and I'm just like, no, I don't want to do it because I'm going to get less value in the future. Obviously, we're managing the book to create the highest amount of value if we thought we could sell something today and that looked good versus the future value that we can create by holding it, we would do that. And I think we've shown over the last 20 years that we do, do that, right?
I mean, a lot of times, our businesses are we're selling at what we believe is a fair price to us, but that allows the acquirer can create more value under their structure, under their cost of capital, under their cost of debt, under their synergistic opportunities, whatever the case may be.
Understood. That's helpful. And then maybe just a final question on how you guys think about commodities in terms of your exposure. You guys actually have a decent amount of exposure through commodities, whether it's through the segments or even you did have through at least the investment funded, whether it was Freeport Macquarie at one point. I think you guys have exited that position.
What kind of determines what the allocation you guys have to commodities and stuff relative to everything else? It just seems that you guys are more involved in that segment than perhaps than have been for some time at this point.
Yes, I don't think that I think our exposures to commodities and making those investment decisions really just has it's a name by name basis and the investment opportunity at the time. By the way, just to clarify, because I don't want to people that we are not out of Freeport Macronet, just to be clear.
I think okay,
it was just you guys got under the 5% threshold, is that right or?
Yes, that sounds correct. But I just want to read stories that we're out of it because that's not actually true. But in any event, yes, we've paired exposures as we've had significant gains in it. But with respect to commodities in general, it's a case by case basis. I would also say that maybe we haven't articulated on it well is that when we do have a name like Freeport or like an oil and gas producer or whatever the case may be, we also do put on name specific hedges to de risk some of the commodity price movement.
That's helpful. And that's a
It could be shorting copper, it could be shorting WTI, it could be shorting a basket of similar companies that operate at a higher level. There's a number of things we do to manage the risk.
Understood. That's very helpful. Thank you. And that's it for me.
Okay. Thanks, Dan.
Your next question comes from the line of Jesse Friedman from Warlander. Go ahead, please. Your line is open.
Hi, good morning. Just two questions in regards to Tropicana. 1 would just be interested in the strategy for the business going forward in the context of the current M and A environment. It seems like there are peak multiples being achieved from sellers in the current marketplace. And then the second one would be on the balance sheet.
Just wanted to know what you think the optimal capital structure would be for this company?
Yes. I mean our strategy with Tropicana is to continue to obviously they filed their 10 ks a day or 2 ago. They had a record earnings that has been the culmination of 7 years of capital investment back into the business. And it's paying off dividends. We expect 2018 to be a great year for them.
Look, manage I'm not going to comment on M and A activity other than to say that management is they've been out they've over the years looked at a number of opportunities that they could acquire harvest synergies and management does a pretty good job of operating casinos and they are constantly looking for casinos that they believe are mismanaged, so to speak, and we're happy to support them in that. And as far as other M and A opportunities, it's just a matter of the capital structure, it's something that we periodically look at. As you can imagine, a number of investment bankers reach out. And so we're constantly evaluating the capital structure. We appreciate that there's not a ton of debt on the Tropicana right now.
Thank you.
And I
currently have no more questions in queue.
Okay. Thanks everybody for joining us and we'll look forward to talking to you after Q1 results are released. Have a good day.