The automotive segment of Icahn Enterprises (the Icahn Automotive Group) came through with $693 million in net sales and other revenue from operations for the three months ended March 31, 2019 — an increase of $7 million (or 1%) compared to a year ago. Management attributed the increase to an $11-million (or 3%) rise in automotive services revenue, (up $7 million, or 2%, on an organic basis) tied to growing DIFM and fleet business.
This was offset, in part, by a $4-million decrease in aftermarket parts sales. On an organic basis, aftermarket parts sales were flat year-over-year, as a $13-million increase in commercial sales was offset by a decrease in retail sales.
The group’s cost of goods sold and other expenses from operations increased by $20 million (or 4%) due to higher sales volume as well as a reduction in vendor support funds.
Gross margin on net sales and automotive services labor revenue decreased by $13 million (or 6%) to $199 million. As a percentage of net sales and automotive services labor revenue, gross margin declined from 31% to 29% on a year-over-year basis. According to management, the automotive segment experienced some margin rate contraction for its services and parts businesses tied to a reduction in vendor support funds and other unfavorable margin adjustments.
For the quarter, Icahn Automotive reported a $22-million adjusted loss before interest, taxes, depreciation and amortization because of expenses related to the transformation of the business and additional costs related to investments in the commercial business. This compares to a $10-million adjusted loss a year ago.
As a reminder, Icahn Automotive is in the process of implementing a multiyear transformational plan designed to restructure its operations and improve its profitability. And, according to Icahn Enterprises’ quarterly report filed with the SEC on May 2, the automotive segment continues to evaluate “strategic alternatives” with respect to the aftermarket parts business.
The Icahn Automotive Group consists of Pep Boys, Auto Plus, Precision Tune Auto Care and AAMCO Total Auto Care. It also is the licensor of Cottman Transmission and operates under several local brands. Icahn Automotive has over 22,000 employees, more than 2,000 company-owned and franchise locations, and 25 distribution centers throughout the United States (including Puerto Rico) and Canada.