Good morning, and welcome to the Icahn Enterprises LP Q1 2016 Earnings Call with Jesse Lin, General Counsel Keith Cozza, President and CEO and Seung Won Cho, Chief Financial Officer. I would now like to hand the call over to Jesse Lynn, who will read the opening statement.
Thank you. 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.
I will now turn the call over to Keith Cozza, our Chief Executive Officer. Thanks, Jesse. Good morning, and welcome to the Q1 2016 Icahn Enterprises earnings conference call. Joining me on today's call is Sung Hwan Cho, our Chief Financial Officer. I would like to begin by providing some brief highlights.
Song 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 question. For Q1 2016, the net loss attributable to Icahn Enterprises was 837 dollars or $6.21 per LP unit compared to net income of $161,000,000 or $1.27 per LP unit in the prior year period. The Q1 net loss attributable to Icahn Enterprises included a $334,000,000 noncash goodwill impairment charge at our Energy segment. Adjusted EBITDA attributable to Icahn Enterprises for Q1 2016 was a loss of $80,000,000 compared to a gain of $586,000,000 in Q1 of 2015.
Our investment funds had a negative return of 12.8% in Q1 of 2016 versus the positive return of 4.3% in Q1 of 2015. Returns were hampered by the decline in value of certain core long equity positions and the increase in value of certain short equity positions, including various market hedges. 1st quarter 20 16 sales for our automotive segment were $2,300,000,000 an increase of 26% over Q1 of 2015. During Q1, ICON Enterprises acquired Pep Boys, a leading aftermarket provider of automotive service, tires, parts and accessories across the United States and Puerto Rico. This acquisition has tripled our corporate owned store footprint and significantly enhanced our distribution capabilities.
We are in the early stages of integrating the operations of both Pep Boys and Auto Plus and are encouraged by the significant synergies we have identified. In our Energy segment, Q1 results were impacted by the downtime associated with the final phase of a major scheduled turnaround at CVR Refining's Coffeyville refinery as well as the aforementioned full refinery business. For Q1 2016, consolidated EBITDA was $61,000,000 compared to $236,000,000 in Q1 of 2015. Subsequent to quarter end, CVR Partners completed its acquisition of Renntek Nitrogen's East Dubuque fertilizer facility. We believe that CVR Partners will benefit from the geographic and feed stock diversification that will come with the additional facility.
In our railcar segment, investments in our railcar services and railcar leasing businesses continued to complement our manufacturing operations with both business lines helping to offset the lower volume of new railcar shipment. The segment's lease fleet was over 45,000 railcars at the end of Q1 2016 with average lease rates improving from the prior year period. Also during Q1, IEP acquired the remaining 25 percent economic interest in American Railcar Leasing not already owned by us in exchange for the issuance of IEP Depository Units. In our gaming segment, Tropicana had a strong operational quarter across several of its properties, especially in Atlantic City. Trop AC experienced higher gaming volumes as it has benefited from the closure of competitors and recent capital investment.
Additionally, we've added another operating casino in Atlantic City market to our gaming segment with the acquisition of Trump Taj Mahal upon its emergence from bankruptcy in February of 2016. In March, Tropicana entered into an agreement to manage the Trump Taj Mahal Casino. We are optimistic that Tropicana management team can create significant value at Taj Mahal and help the property reach its full potential. We were very active in the Q1 closing several acquisitions in a number of our segments and we remain focused on integrating these businesses into our existing operations. With that, let me turn it over to Son.
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 2016, the net loss attributable to Icahn Enterprises was $837,000,000 compared to a net income of $161,000,000 in the prior year period. As you can see on Slide 5, in Q1 2016, the net loss was driven by the performance of the investment funds in our Energy segment. Our investment funds were negatively impacted by the performance of some of the core holdings, particularly in the energy sector.
In our energy segment, we incurred a full impairment of goodwill associated with the refinery business. Adjusted EBITDA attributable to Icahn Enterprises for Q1 2016 was a loss of $80,000,000 compared to a gain of $586,000,000 in Q1 2015. I will now provide more detail regarding the performance of the individual segments. Our Investment segment had a loss attributable to Icahn Enterprises of $450,000,000 for Q1 2016. The investment funds had a return of negative 12.8% in Q1 2016 compared to a return of a positive 4.3% for Q1 2015.
Long positions had a negative 2.7% return for the current quarter, while short positions and other expenses had a negative performance attribution of 10.1%. Since inception in November 2004 through the end of Q1 2016, the investment fund's gross return is 136 percent or 8% annualized. The investment funds continue to be significantly hedged. At the end of Q1 2016, net short exposure was 149% compared to a net short exposure of 25% at the end of 2015. IEP's investment in the funds was $1,800,000,000 as of March 31, 2016.
During the Q1, we redeemed $1,050,000,000 from the funds to fund the acquisition of Pep Boys. And now to our Energy segment. For Q1 2016, our Energy segment reported revenues of $905,000,000 and consolidated adjusted EBITDA of $61,000,000 compared to revenues of $1,400,000,000 and consolidated adjusted EBITDA of $236,000,000 for the prior year period. Operating results for Q1 2016 were negatively impacted by the downtime associated with the final phase of a major scheduled turnaround at CVR Refining's Coffeyville refinery. CVR Refining reported Q1 2016 adjusted EBITDA of $35,000,000 compared to $162,000,000 in the prior year period.
The decline is due to the Coffeyville refinery turnaround downtime as well as weak crack spreads. Refining margin adjusted for FIFO impact per crude oil throughput barrel, a non GAAP financial measure, was $7.19 in Q1 2016 compared to $15.03 in the prior year period. This decrease was primarily driven by lower regional crack spreads. Due to the challenging pricing environment during Q1 2016, we performed interim impairment testing for the goodwill associated with the refining operations and wrote off the entire balance of $574,000,000 TBR Partners reported Q1 2016 adjusted EBITDA of $28,000,000 compared to $38,000,000 for Q1 2015. The Coffeyville fertilizer plant continued to operate well following last year's turnaround and has maintained its performance since posting record production rates for the Q4 of 2015.
For Q1 2016, average realized gate prices for UAN and ammonia were $209 per ton and $3.67 per ton respectively compared to $2.63 per ton and $5.53 per ton respectively for the same period in 2015. Now turning to our Automotive segment. Our Automotive segment's Q1 2016 net sales were $2,300,000,000 up 26% from the prior year period, primarily due to the inclusion of Pep Boys and IAH Auto Businesses. During Q1 2016, Icahn Enterprises acquired Pep Boys, a leading provider of automotive service, tires, parts and accessories across the U. S.
And Puerto Rico. Pep Boys and IEH Auto are being operated together in order to grow their sales to the do it for me distributors and service professionals to grow their automotive service business and to maintain their do it yourself customer bases by offering the broadest product assortment in the automotive aftermarket. Consolidated adjusted EBITDA for our automotive segment was $208,000,000 in Q1 2016 compared to $142,000,000 in Q1 2015. Federal Mobile on a standalone basis reported Q1 sales of $1,900,000,000 up 3% over the comparable period last year. Net sales increases from the acquired valvetrain business as well as strong U.
S. And Canadian domestic aftermarket sales were partially offset by the impact of currency exchange rate fluctuations. Operational EBITDA in Q1 2016 was $193,000,000 up $51,000,000 or 36% compared to Q1 2015. IEH Auto and Pep Boys on a standalone basis had Q1 2016 revenue of approximately $520,000,000 and adjusted EBITDA of $24,000,000 Please note that Pep Boys results include only 2 months of operations since the acquisition at the beginning of February 2016. Neither company was included in the financials for Q1 2015.
Now turning to the Railcar segment. Our Railcar segment had railcar shipments in Q1 2016 of approximately 13 30 railcars, including approximately 200 railcars to leasing customers as compared to 2,670 railcars for the prior year period, of which approximately 1780 railcars were to leasing customers. As of March 31, 2016, ARI had a backlog of 5,958 railcars, including 13 60 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 2014 down to approximately 95,000 railcars at the end of Q1 2016. 78% of the current industry backlog comprised of tank cars and covered hopper railcars, the 2 primary railcar types manufactured and leased by our railcar segment.
The leasing businesses within the railcar segment continue to perform well. In Q1 2016, we grew the combined leased car portfolios to roughly 45,000 railcars from approximately 41,000 railcars at the end of Q1 2015. Average lease rates in Q1 2016 improved from the prior year period. During Q1 2016, IEP acquired the remaining 25 percent economic interest in American Railcar Leasing not already owned by us via the issuance of additional IEP depository units. Adjusted EBITDA attributable to IEP the railcar segment grew to $97,000,000 in Q1 2016 compared to $68,000,000 in the prior year period.
The increase was primarily driven by the growth and increased ownership of the leasing businesses. Now turning to our Gaming segment. During Q1 2016, we obtained control and began consolidating the results of Trump Entertainment Resorts, which owns and operates Trump Taj Mahal Casino Resort in Atlantic City, New Jersey. Q1 2016 financials include approximately 1 month of results from Trump Entertainment. Total gaming segment operating revenues were $218,000,000 in Q1 2016 compared to $193,000,000 in Q1 20 15.
The increase was primarily due to higher gaming volumes at Trop AC as well as the impact of the Trump acquisition in February of 2016. Trump AC Casino revenues have benefited from a capital renovation project that was completed in the middle of 2015. The Atlantic City market experienced year over year increases in casino win of 3.1%. Tropicana's slot hold percentage was 9.6 percent for Q1 2016 compared to 9.4% for Q1 2015. Tropicana's table game hold percentage was 18.6% for Q1 2016 compared to 17.5% for Q1 2015.
Our gaming segment's consolidated adjusted EBITDA for Q1 2016 was $34,000,000 compared to $30,000,000 in the prior year period. The increase in EBITDA was primarily due to higher revenues in Atlantic City as well as improved performance at Lumiere Place and Trop, Evansville. Now turning to our Food Packaging segment. Net sales for Q1 twenty sixteen decreased by $8,000,000 or 9% or 9% compared to the prior year period. The decrease was primarily due to unfavorable foreign currency translation, lower sales volume and unfavorable price and product mix.
Pricing globally has been weak due to competitors with weaker functional currencies and some excess capacity. Consolidated adjusted EBITDA of $10,000,000 in Q1 2016 was down $3,000,000 from the prior year period. Gross margin as a percentage of net sales was 21% in Q1 2016 compared to 22% in Q1 2015. And now to our Metals segment. Net sales for Q1 2016 decreased by $48,000,000 or 45% compared to the prior year period.
The net sales decrease was driven by lower shipment volumes and lower selling prices across all product lines. Adjusted EBITDA was a loss of $6,000,000 in Q1 2016 compared to a loss of $9,000,000 in the prior year period. Gross margin as a percentage of net sales was a loss of 10% for Q1 2016 compared to a loss of 9% for the prior year. Although scrap prices have started to recover, prices are still at low levels and volumes continue to be challenging in this market environment. And now to our Real Estate segment.
Real Estate revenues were $19,000,000 in Q1 2016, which was $19,000,000 below the comparable prior year period. In Q1 2015, a $19,000,000 gain was recorded from the sale of a net leased property. Operating revenue from our Real Estate segment were substantially derived from our resort and rental operations for both Q1 'sixteen and Q1 'fifteen. Our net lease portfolio continues to drive earnings in this segment with its 15 properties generating strong cash flows. The Real Estate segment generated $9,000,000 of adjusted EBITDA in Q1 of 2016.
Now to our Mining segment. Our Mining segment has been concentrating on sales in Brazil where the best margins are being captured. Iron ore prices have rebounded significantly from year end based upon increased demand in China. Now turning to Home Fashion segment. Q1 2016 net sales increased by $3,000,000 compared to the prior year due to higher sales volumes.
We are continuing to concentrate on higher margin lines and believe we will have solid placements for the remainder of 2016. Adjusted EBITDA was $2,000,000 in Q1 2016, which was consistent with the prior year period. Gross margin as a percentage of net sales was 16% for Q1 2016 as compared to 15% for Q1 2015. Now I will discuss our liquidity position. We maintain ample liquidity at the holding company and at each of our operating subs to take advantage of attractive opportunities.
We ended Q1 2016 with cash, cash equivalents, liquid assets and our investment in the investment funds and revolver availability totaling approximately $4,500,000,000 Our subsidiaries have approximately $1,700,000,000 of cash and $800,000,000 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 the opportunities within and outside of our existing operating segments. Thank you. Operator, can you please open it up for questions?
Thank you. Our first question comes from the line of Dan Fannon from Jefferies. Your line is open.
Thanks. Good morning, guys.
Hi, Dan.
I guess just on the fund, can you first give us some timing of when some of the capital might come back into the vehicle with post the Pep Boys? I think it was $1,000,000,000 you referenced that went to finance that. And then I get the numbers around the positioning net short. I guess just broadly, if you could just give us some context around how you guys are thinking about the markets a little bit today. Obviously, that position is more negative certainly than where you were at the end of the year.
So just kind of give us a little bit more color would be helpful.
Sure. Hey, Dan, it's Keith. Your first with respect to your first question, we continue to work with various banks on the capital structure of Pep Boys, which is effectively unlevered at this point. And we think we'll have at least Phase 1 of the capital structure probably put in place sometime this summer, which will probably be in the form of some sort of asset backed loan, just given the sizable levels of inventory and receivables that both Auto Plus and Pep Boys carry. So it's pretty right for an ABL and it's cost effective.
So we'll work to probably implement that sometime this summer. We continue to explore options related to the real estate. And depending on the level of proceeds received from these various financings we're considering, it will involve some portion of the cash going back up to holdco holding company and effectively we'll evaluate the liquidity at holding company and some of it very well could go back into the investment segment. As far as the positioning of the funds, I think Carl has been fairly vocal in recent weeks in the media that reflects our views of the markets of very high multiple market S and Ps trading, I would use the term frothy and I think it reflects our concern related to we're much more concerned about the market going down 20% than we are going up 20%. And so the significant weighting to the short side reflects that.
Sung mentioned earlier and you'll see in the 10 Q when it's released significant net short equity exposures. I would add on top of that, we have a number of long commissions long positions that are linked to commodities that have a very high beta relative to the market. And so although the number can look significant from the net short position in balancing it out and trying to hedge out macro risk, some of our long positions do have a significant amount of volatility compared to the general market. So part of it is that as well.
Great. That's helpful. And I guess just thinking about the distributions that are coming up from the holdco's, the CVR not paying a distribution, I think in the Q1. And then thinking about that covering the corporate interest expense and kind of the HoldCo cost, can you just us an update as to what the overall kind of dividend outlook that from your ownership across your various businesses, how you think about that progressing this year?
Sure. So I just want to clarify one point though. Although CVRR did not pay a dividend this quarter, CVI maintained its dividend policy dividend of $0.50 and did pay a $0.50 dividend up to IEP. So I just wanted to clarify that because CVI runs with significant excess liquidity. But that being said, we're continuing to take distributions from ARI.
They continue to have a decent pipeline of cash flow that I don't foresee any reason that, that would change. And CVI has ample excess liquidity and cash, but we're going to the Board of CVI reevaluates that quarterly because as you pointed out, the underlying refinery with crack spreads where they are has definitely been challenged in the Q1. But they do run excess cash where they're going to reconsider it every quarter, but we're hopeful that cracks improve a little bit and we'll be able to maintain the dividend there, which will be ample cash flow up to IEP. One additional thing that happened in the quarter that we mentioned was the American Railcar Leasing, which has significant excess cash and actually moved 100 and $25,000,000 up to the holding company Icon Enterprises Holding Company. American Railcar Leasing, now that they own 100 percent of it, they'll enjoy the benefits of even bigger dividends from the railcar operation from the leasing operation.
Great. Thank you.
Yes. Thanks, Dan.
Thank And at this time, I'm showing no further questions. I'd like to turn the call back over to management for any closing remarks.
Okay. Thank you. We look forward to speaking with everybody to discuss our Q2 results in a few months and thanks for your interest in IEP. Talk soon.
Ladies and gentlemen, thank you for participating in today's conference. This concludes today's program. You may now disconnect. Everyone have a great day.