ICAHN ENTERPRISES L.P. The following discussion is intended to assist you in understanding our present business and the results of operations together with our present financial condition. This section should be read in conjunction with our unaudited condensed consolidated financial statements and the accompanying notes contained in this Quarterly Report on Form 10-Q for the period endedJune 30, 2021 (this "Report"), as well as our Annual Report on Form 10-K for the year endedDecember 31, 2020 filed with theSecurities and Exchange Commission onFebruary 26, 2021 . Executive Overview IntroductionIcahn Enterprises L.P. ("Icahn Enterprises ") is a master limited partnership formed inDelaware onFebruary 17, 1987 .Icahn Enterprises Holdings L.P. ("Icahn Enterprises Holdings ") is a limited partnership formed inDelaware onFebruary 17, 1987 . References to "we," "our" or "us" herein include bothIcahn Enterprises andIcahn Enterprises Holdings and their subsidiaries, unless the context otherwise requires.Icahn Enterprises owns a 99% limited partner interest inIcahn Enterprises Holdings .Icahn Enterprises Holdings and its subsidiaries own substantially all of the assets and liabilities ofIcahn Enterprises and conduct substantially all of its operations. Therefore, the financial results ofIcahn Enterprises andIcahn Enterprises Holdings are substantially the same, with differences relating primarily to allocations to the general and limited partners. We do not discussIcahn Enterprises andIcahn Enterprises Holdings separately unless we believe it is necessary to an understanding of the businesses. We are a diversified holding company owning subsidiaries currently engaged in the following continuing operating businesses: Investment, Energy, Automotive,Food Packaging , Metals, Real Estate, Home Fashion and Pharma. We also report the results of our Holding Company, which includes the results of certain subsidiaries ofIcahn Enterprises andIcahn Enterprises Holdings (unless otherwise noted), and investment activity and expenses associated with our Holding Company.
Significant Transactions and Developments
Debt Issuances
InJanuary 2021 ,Icahn Enterprises andIcahn Enterprises Finance Corp. (together the "Issuers") issued$750 million in aggregate principal amount of 4.375% senior unsecured notes due 2029 (the "New 2029 Notes"). The proceeds from the New 2029 Notes were used to redeem$750 million principal amount of 6.250% senior unsecured notes due 2022, and to pay accrued interest, related fees and expenses. InApril 2021 , the Issuers issued$455 million in aggregate principal amount of additional 5.250% senior unsecured notes due 2027. The proceeds from this issuance were used to redeem the remaining$455 million principal amount of 6.250% senior unsecured notes due 2022, and to pay accrued interest, related fees and expenses. Management Changes
OnApril 5, 2021 , we announced the hiring ofAris Kekedjian , who succeededKeith Cozza as President and Chief Executive Officer as ofMay 10, 2021 .Mr. Kekedjian also joined the board of directors of our general partner. In addition, onMay 17, 2021 , we announced the hiring ofDavid Willetts , who succeededSungHwan Cho as Chief Financial Officer as ofJune 7, 2021 .Mr. Willetts also joined the board of directors of our general partner. 41 Table of Contents Results of Operations
Consolidated Financial Results
Our operating businesses comprise consolidated subsidiaries which operate in
various industries and are managed on a decentralized basis. In addition to our
Investment segment's revenues from investment transactions, revenues for our
operating businesses primarily consist of net sales of various products,
services revenue, franchisor operations and leasing of real estate. Due to the
structure and nature of our business, we primarily discuss the results of
operations by individual reporting segment in order to better understand our
consolidated operating performance. Certain other financial information is
discussed on a consolidated basis following our segment discussion, including
other revenues and expenses included in continuing operations as well as our
results from discontinued operations. In addition to the summarized financial
results below, refer to Note 12, "Segment Reporting," to the condensed
consolidated financial statements for a reconciliation of each of our reporting
segment's results of continuing operations to our consolidated results.
Throughout 2020, the COVID-19 pandemic, and actions taken by governments and
others in response thereto, has negatively impacted the global economy,
financial markets, and the industries in which our subsidiaries operate. Our
consolidated results of operations and financial condition have been impacted
primarily by the volatility in the fair value of investments held by our
Investment segment and the Holding Company as well as declines in the global
demand for refined products, especially gasoline and diesel fuels, with respect
to our Energy segment. The impact on our businesses has also included the
acceleration of selective planned store closures in our Automotive segment and
recording write-downs to inventories. The economic conditions that persisted for
much of 2020 have improved in 2021 as more governments reduce restrictions and
more businesses resume operations.
The comparability of our summarized consolidated financial results presented
below is affected primarily by the performance of the Investment Funds (as
defined below), the results of operations of our Energy segment, impacted by the
demand and pricing for its products, and our Holding Company's realized and
unrealized gains and losses on certain equity investments. Refer to our
respective segment discussions and "Other Consolidated Results of Operations,"
below for further discussion.
Net Income (Loss)
Revenues Net Income (Loss) Attributable to Icahn Enterprises
Three Months Ended June 30, Three Months Ended June 30, Three Months Ended June 30,
2021 2020 2021 2020 2021 2020
(in millions)
Investment $ 189 $ 1,102 $ 145 $ 1,048 $ 68 $ 479
Holding Company 13 132 (156) (110) (156) (110)
Other Operating Segments:
Energy 1,797 694 (14) (3) (11) 1
Automotive 635 581 (38) (50) (38) (50)
Food Packaging 104 101 2 3 2 3
Metals 153 34 7 (10) 7 (10)
Real Estate 27 25 (4) (13) (4) (13)
Home Fashion 51 40 (2) (1) (2) (1)
Pharma 19 - (2) - (2) -Other operating segments 2,786 1,475 (51) (74) (48) (70) Consolidated$ 2,988 $ 2,709 $ (62)$ 864 $ (136) $ 299 42 Table of Contents Net Income (Loss) Revenues Net Income (Loss) Attributable to Icahn Enterprises Six Months Ended June 30, Six Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 2021 2020 (in millions) Investment$ 1,132 $ (663) $ 1,007 $ (754) $ 459 $ (447) Holding Company 21 (205) (313) (420) (313) (420) Other Operating Segments: Energy 3,329 1,851 (81) (116) (44) (67) Automotive 1,232 1,217 (84) (123) (84) (123) Food Packaging 199 192 1 (1) 1 - Metals 274 120 12 (13) 12 (13) Real Estate 44 47 (5) (12) (5) (12) Home Fashion 92 90 (6) (3) (6) (3) Pharma 49 - 6 - 6 -
Other operating segments 5,219 3,517
(157) (268) (120) (218)
Consolidated $ 6,372 $ 2,649 $ 537 $ (1,442) $ 26 $ (1,085)
Investment
We invest our proprietary capital through various private investment funds
("Investment Funds"). As of June 30, 2021 and December 31, 2020 , we had
investments with a fair market value of approximately $4.7 billion and $4.3
billion , respectively, in the Investment Funds. As of June 30, 2021 and
December 31, 2020 , the total fair market value of investments in the Investment
Funds made by Mr. Icahn and his affiliates (excluding us) was approximately $5.6
billion and $5.0 billion , respectively.
Our Investment segment's results of operations are reflected in net income
(loss) in the condensed consolidated statements of operations. Our Investment
segment's net income (loss) is driven by the amount of funds allocated to the
Investment Funds and the performance of the underlying investments in the
Investment Funds. Future funds allocated to the Investment Funds may increase or
decrease based on the contributions and redemptions by our Holding Company,
Mr. Icahn and his affiliates and by Brett Icahn , son of Mr. Icahn . Additionally,
historical performance results of the Investment Funds are not indicative of
future results as past market conditions, investment opportunities and
investment decisions may not occur in the future. Changes in general market
conditions coupled with changes in exposure to short and long positions have
significant impact on our Investment segment's results of operations and the
comparability of results of operations year over year and as such, future
results of operations will be impacted by our future exposures and future market
conditions, which may not be consistent with prior trends. Refer to the
"Investment Segment Liquidity" section of our "Liquidity and Capital Resources"
discussion for additional information regarding our Investment segment's
exposure as of June 30, 2021 .
For the three months ended June 30, 2021 and 2020, our Investment Funds' returns
were 1.4% and 11.7%, respectively. For the six months ended June 30, 2021 and
2020, our Investment Funds' returns were 10.8% and (7.9)%, respectively. Our
Investment Funds' returns represent a weighted-average composite of the average
returns, net of expenses.
The following table sets forth the performance attribution for the Investment
Funds' returns.
Three Months Ended June 30 ,
Six Months Ended
2021 2020 2021 2020
Long positions 6.6 % 22.7 % 30.3 % (19.9) %
Short positions (5.1) % (11.0) %
(19.3) % 12.0 %
Other (0.1) % - % (0.2) % - %
1.4 % 11.7 % 10.8 % (7.9) %
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The following table presents net income (loss) for our Investment segment for
the three and six months ended
Three Months Ended June 30, Six Months Ended June 30,
2021 2020 2021 2020
(in millions)
Long positions $ 992 $ 2,909 $ 2,906 $ (1,692)
Short positions (837) (1,858) (1,879) 933
Other (10) (3) (20) 5
$ 145 $ 1,048 $ 1,007 $ (754) Three Months Ended
For the three months endedJune 30, 2021 , the Investment Funds' positive performance was driven by net gains in their long positions, offset in part by net losses in their short positions. The positive performance of our Investment segment's long positions was driven primarily by gains from two energy sector investments aggregating$494 million and a technology sector investment of$193 million . The aggregate performance of investments with net gains across various sectors accounted for an additional positive performance of our Investment segment's long positions. The negative performance of our Investment segment's short positions was driven primarily by the negative performance of broad market hedges of$338 million and an energy sector investment of$256 million . The aggregate performance of investments with net losses across various sectors accounted for an additional negative performance of our Investment segment's short positions. For the three months endedJune 30, 2020 , the Investment Funds' positive performance was driven by net gains in their long positions, offset in part by net losses in their short positions. The positive performance of our Investment segment's long positions was driven by gains from a consumer, cyclical sector investment of$998 million , two energy sector investments aggregating$906 million and aggregate gains from four other consumer, cyclical sector investments of$552 million . The aggregate performance of investments with net gains across various other sectors accounted for an additional positive performance of our Investment segment's long positions. The negative performance of our Investment segment's short positions was driven primarily by the negative performance of broad market hedges of approximately$2.1 billion and aggregate losses from short positions across various sectors, offset in part the positive performance of our Investment segment's short exposure to commercial mortgage-backed securities through credit default swap contracts of$534 million .
Six Months Ended
For the six months endedJune 30, 2021 , the Investment Funds' positive performance was driven by net gains in their long positions, offset in part by net losses in their short positions. The positive performance of our Investment segment's long positions was driven primarily by gains from two energy sector investments aggregating$1.6 billion . The aggregate performance of investments with net gains across various sectors accounted for an additional positive performance of our Investment segment's long positions. The negative performance of our Investment segment's short positions was driven primarily by the negative performance of an energy sector investment of$751 million and broad market hedges of$667 million . The aggregate performance of investments with net losses across various sectors accounted for an additional negative performance of our Investment segment's short positions. The negative performance of our Investment segment's short positions was offset in part by gains from a consumer, cyclical sector investment of$191 million . For the six months endedJune 30, 2020 , the Investment Funds' negative performance was driven by net losses in their long positions, offset in part by net gains in their short positions. The negative performance of our Investment segment's long positions was driven by losses from a consumer, non-cyclical sector investment of$637 million , aggregate losses from three technology sector investments of$745 million and an energy sector investment of$130 million . The aggregate performance of investments with net losses across various other sectors accounted for an additional negative performance of our Investment segment's long positions. The positive performance of our Investment segment's short positions was driven by the positive performance of their short exposure to commercial 44 Table of Contents
mortgage-backed securities through credit default swap contracts of
Energy Our Energy segment is primarily engaged in the petroleum refining and nitrogen fertilizer manufacturing businesses. The petroleum business accounted for approximately 94% and 90% of our Energy segment's net sales for the six months endedJune 30, 2021 and 2020, respectively. The results of operations of the petroleum business are primarily affected by the relationship between refined product prices and the prices for crude oil and other feedstocks that are processed and blended into petroleum products, such as gasoline, diesel fuel and jet fuel, that are produced by a refinery ("refined products"). The cost to acquire crude oil and other feedstocks and the price for which refined products are ultimately sold depend on factors beyond our Energy segment's control, including the supply of and demand for crude oil, as well as gasoline and other refined products. This supply and demand depend on, among other factors, changes in domestic and foreign economies, weather conditions, domestic and foreign political affairs, production levels, the availability of imports, the marketing of competitive fuels and the extent of government regulation. Because the petroleum business applies first-in, first-out accounting to value its inventory, crude oil price movements may impact gross margin in the short-term fluctuations in the market price of inventory. The effect of changes in crude oil prices on the petroleum business' results of operations is influenced by the rate at which the prices of refined products adjust to reflect these changes. The COVID-19 pandemic, and the actions taken by governments and others, has negatively impacted the energy industry. The COVID-19 pandemic has also resulted in significant business and operational disruptions, including business closures, liquidity strains, destruction of non-essential demand, as well as supply chain challenges, travel restrictions, stay-at home orders, and limitations on the availability of the workforce. As a result, the demand for gasoline and diesel in the regions that our Energy segment operates declined beginning in the first quarter of 2020. The declines were amplified in the first quarter of 2020 by market plays between the world's largest oil producers. The simultaneous shocks in oil supply and demand have resulted in a decline in the price of crude oil and lead to a significant decrease in the price of refined products sold by our Energy segment. However, beginning in late 2020 and into 2021, the U.S. market for refined products improved and demand increased as travel restrictions and stay-at-home orders were eased. In addition to recent market conditions, there are long-term factors that may impact the demand for refined products. These factors include mandated renewable fuels standards, proposed climate change laws and regulations, and increased mileage standards for vehicles. The petroleum business is also subject to the Renewable Fuel Standard of theUnited States Environmental Protection Agency , which requires it to either blend "renewable fuels" with its transportation fuels or purchase renewable identification numbers ("RINs"), in lieu of blending. The price of RINs has been extremely volatile and the future cost of RINs for the petroleum business is difficult to estimate. Additionally, the cost of RINs is dependent upon a variety of factors, which include the availability of RINs for purchase, the price at which RINs can be purchased, transportation fuel production levels, the mix of the petroleum business' petroleum products, as well as the fuel blending performed at its refineries and downstream terminals, all of which can vary significantly from period to period. Refer to Note 16, "Commitments and Contingencies," to the condensed consolidated financial statements for further discussion of RINs. InDecember 2020 , our Energy segment approved a renewable diesel project at one of its refineries, which would convert the refinery's hydrocracker to a renewable diesel unit ("RDU") capable of producing 100 million gallons of renewable diesel per year and approximately 170 to 180 million RINs annually. As a result of conversion, the crude oil capacity of the refinery will be reduced. Further, the conversion enables our Energy segment to capture additional benefits associated with the existing blenders' tax credit that expires at the end of 2022 and low carbon fuel standard programs in states such asCalifornia . Our Energy segment has additional plans to add pretreating capabilities for the RDU and construction of a similar facility at its other refinery. These collective renewable diesel efforts could reduce our Energy segment's Renewable Fuels Standard ("RFS") exposure. However, any actions taken by theSupreme Court , resulting administration efforts under the RFS, such as denial of existing or previous waiver applications, and market 45
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conditions could significantly impact the amount by which our Energy segment's renewable diesel business mitigates our costs to comply with the RFS, if at all.
Three Months Ended June 30, Six Months Ended June 30,
2021 2020 2021 2020
(in millions)
Net sales $ 1,783 $ 675 $ 3,246 $ 1,806
Cost of goods sold 1,757 645 3,336 1,894
Gross margin $ 26 $ 30 $ (90) $ (88) Three Months Ended
Net sales for our Energy segment increased by$1,108 million (164%) for the three months endedJune 30, 2021 as compared to the comparable prior year period due to an increase in our petroleum business' net sales, which increased$1,075 million , as well as an increase in our nitrogen fertilizer business' net sales, which increased$33 million over the comparable periods. The increase in the petroleum business' net sales was primarily due to an increase in sales of gasoline and distillates attributable to an increase in volumes and more favorable pricing conditions. Volumes were lower in the comparable prior year period due to the full planned turnaround at one of the refineries while another refinery experienced reduced utilization in response to demand reductions driven by the impacts of the COVID-19 pandemic. Our nitrogen fertilizer business' net sales increased primarily due to an increase in urea ammonium nitrate ("UAN") sales primarily due to favorable pricing conditions. Cost of goods sold for our Energy segment increased by$1,112 million (172%) for the three months endedJune 30, 2021 as compared to the comparable prior year period. The increase was primarily due to our petroleum business as a result of higher cost of consumed crude oil. The higher cost of consumed crude oil was due to an increase in volumes, as discussed above, as well as lower derivative performance of$22 million and a$157 million increase in the net cost of RINs. Gross margin for our Energy segment decreased by$4 million for the three months endedJune 30, 2021 as compared to the comparable prior year period. Gross margin as a percentage of net sales was 1% and 4% for the three months endedJune 30, 2021 and 2020, respectively. The decrease in the gross margin as a percentage of net sales was primarily attributable to the petroleum business, which was primarily due to an increase in the net cost of RINs and lower derivative performance, offset in part by higher crack spreads.
Six Months Ended
Net sales for our Energy segment increased by$1,440 million (80%) for the six months endedJune 30, 2021 as compared to the comparable prior year period due to an increase in our petroleum business' net sales, which increased$1,421 million , as well as an increase in our nitrogen fertilizer business' net sales, which increased$19 million over the comparable periods. The increase in the petroleum business' net sales was primarily due to an increase in sales of gasoline and distillates attributable to an increase in volumes and more favorable pricing conditions. Volumes were lower in the comparable prior year period due to the full planned turnaround at one of the refineries while another refinery experienced reduced utilization in response to demand reductions driven by the impacts of the COVID-19 pandemic. Our nitrogen fertilizer business' net sales increased primarily due to an increase in urea ammonium nitrate ("UAN") sales primarily due to favorable pricing conditions. Cost of goods sold for our Energy segment increased by$1,442 million (76%) for the six months endedJune 30, 2021 as compared to the comparable prior year period. The increase was primarily due to our petroleum business as a result of higher cost of consumed crude oil. The higher cost of consumed crude oil was due to an increase in volumes, as discussed above, as well as lower derivative performance of$99 million and a$316 million increase in the net cost of RINs. Gross margin for our Energy segment decreased by$2 million for the six months endedJune 30, 2021 as compared to the comparable prior year period. Gross margin as a percentage of net sales was (3)% and (5)% for the six months endedJune 30, 2021 and 2020, respectively. The improvement in the gross margin as a percentage of net sales was primarily attributable to the petroleum business, which was primarily due to higher crack spreads, offset in part by an increase in the net cost of RINs and lower derivative performance. 46 Table of Contents Automotive
Our Automotive segment's results of operations are generally driven by the distribution and installation of automotive aftermarket parts and the demand for automotive service and maintenance, and is affected by the relative strength of automotive part replacement trends, among other factors. Our Automotive segment is in the process of implementing a multi-year transformation plan, which includes the restructuring of its businesses. The transformation plan includes operating the automotive services and aftermarket parts businesses as separate businesses, streamliningIcahn Automotive's corporate and field support teams, facility closures, consolidations and conversions, inventory optimization actions, and the re-focusing of its automotive parts business on certain core markets. As part of this plan,Icahn Automotive entered into an agreement to sell certain inventory assets relating to its aftermarket parts business at 109 locations and a distribution center inCalifornia and certain other inventory and fixed assets inCalifornia . Aftermarket parts sales from these locations aggregated$30 million and$65 million during the three and six months endedJune 30, 2021 . Costs to implement the transformation plan will include restructuring charges, which will be recorded when specific plans are approved, and which may be significant.
Our Automotive segment's priorities include:
? Positioning the service business to take advantage of opportunities in the
do-it-for-me market and vehicle fleets;
? Optimizing the value of the commercial parts distribution business in certain
high-volume core markets;
? Exiting the automotive parts distribution business in certain low volume,
non-core markets;
? Improving inventory management across
distribution network;
? Investment in customer experience initiatives and selective upgrades in
facilities;
? Investment in employees with focus on training and career development
investments; and
? Business process improvements, including investments in our supply chain and
information technology capabilities.
The following table presents our Automotive segment's operating revenue, cost of
revenue and gross margin. Our Automotive segment's results of operations also
include automotive services labor. Automotive services labor revenues are
included in other revenues from operations in our condensed consolidated
statements of operations, however, the sale of any installed parts or materials
related to automotive services are included in net sales. Therefore, we discuss
the combined results of our automotive net sales and automotive services labor
revenues below.
Three Months Ended June 30, Six Months Ended June 30,
2021 2020 2021 2020
(in millions)
Net sales and other revenue from
operations $ 637 $ 587 $ 1,235 $ 1,222
Cost of goods sold and other
expenses from operations 461 434 886 909
Gross margin $ 176 $ 153 $ 349 $ 313
Three Months Ended
Net sales and other revenue from operations for our Automotive segment for the three months endedJune 30, 2021 increased by$50 million (9%) as compared to the comparable prior year period. The increase was attributable to an increase in automotive services revenues of$70 million (25%) offset in part by a decrease in aftermarket parts sales of$20 million (6%). On an organic basis, aftermarket parts sales increased$13 million over the comparable periods due to an increase in commercial sales of$10 million (6%) and an increase in retail sales of$3 million (14%). However, store closures related to the transformation plan accounted for a$33 million decrease in aftermarket parts sales. The increase in automotive services revenues represents an increase on a primarily organic basis as sales have improved over the comparable prior year period. The COVID-19 pandemic, and the impacts of the actions taken by governments and others, have significantly contributed to a decline in revenues beginning inMarch 2020 . 47 Table of Contents
Cost of goods sold and other expenses from operations for the three months endedJune 30, 2021 increased by$27 million (6%) as compared to the comparable prior year period. The increase was due to overall higher sales volumes as described above. Gross margin on net sales and other revenue from operations for the three months endedJune 30, 2021 increased by$23 million (15%) as compared to the comparable prior year period. Gross margin as a percentage of net sales and other revenue from operations was 28% and 26% for the three months endedJune 30, 2021 and 2020, respectively. Due to the COVID-19 pandemic, our Automotive segment accelerated planned store closures in 2020, shifting our Automotive segment's business from a majority attributable to aftermarket parts sales to a majority attributable to higher margin automotive services.
Six Months Ended
Net sales and other revenue from operations for our Automotive segment for the six months endedJune 30, 2021 increased by$13 million (1%) as compared to the comparable prior year period. The increase was attributable to an increase in automotive services revenues of$83 million (14%) offset in part by a decrease in aftermarket parts sales of$70 million (11%). On an organic basis, aftermarket parts sales increased$2 million over the comparable periods due to an increase in commercial sales of$3 million (1%) offset in part by a decrease in retail sales of$1 million (1%). However, store closures related to the transformation plan accounted for a$72 million decrease in aftermarket parts sales. The increase in automotive services revenues represents an increase on a primarily organic basis as sales have improved over the comparable prior year period. The COVID-19 pandemic, and the impacts of the actions taken by governments and others, have significantly contributed to a decline in revenues beginning inMarch 2020 . Cost of goods sold and other expenses from operations for the six months endedJune 30, 2021 decreased by$23 million (3%) as compared to the comparable prior year period. The decrease was primarily due to lower costs attributable to lower aftermarket parts sales which exceeded higher costs associated with higher services revenues. Gross margin on net sales and other revenue from operations for the six months endedJune 30, 2021 increased by$36 million (12%) as compared to the comparable prior year period. Gross margin as a percentage of net sales and other revenue from operations was 28% and 26% for the six months endedJune 30, 2021 and 2020, respectively. Due to the COVID-19 pandemic, our Automotive segment accelerated planned store closures in 2020, shifting our Automotive segment's business from a majority attributable to aftermarket parts sales to a majority attributable to higher margin automotive services.
Our Food packaging segment's results of operations are primarily driven by the production and sale of cellulosic, fibrous and plastic casings for the processed meat and poultry industry and derives a majority of its total net sales from customers located outsidethe United States .
Three Months Ended
Net sales for the three months endedJune 30, 2021 increased$2 million (2%) as compared to the comparable prior year period. The increase was due to an increase in price and product mix as well as the favorable effects of foreign exchange, offset in part by lower volumes. Cost of goods sold for the three months endedJune 30, 2021 increased by$6 million (7%) as compared to the comparable prior year period due to the effects of purchase price variance, manufacturing variances and distribution costs. Gross margin as a percentage of net sales was 17% and 21% for the three months endedJune 30, 2021 and 2020, respectively.
Six Months Ended
Net sales for the six months endedJune 30, 2021 increased$5 million (2%) as compared to the comparable prior year period. The increase was due to an increase in price and product mix as well as the favorable effects of foreign exchange, offset in part by lower volumes. Cost of goods sold for the six months endedJune 30, 2021 increased by$8 million (5%) as compared to the comparable prior year period due to the effects of purchase price variance, manufacturing variances and distribution costs. Gross margin as a percentage of net sales was 19% and 21% for the six months endedJune 30, 2021 and 2020, respectively.
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Metals
The scrap metals business is highly cyclical and is substantially dependent upon the overall economic conditions inthe United States and other global markets. Ferrous and non-ferrous scrap has been historically vulnerable to significant declines in consumption and product pricing during prolonged periods of economic downturn or stagnation.
Three Months Ended
Net sales for the three months endedJune 30, 2021 increased by$119 million (350%) compared to the comparable prior year period primarily due to higher volumes and higher selling prices. Cost of goods sold for the three months endedJune 30, 2021 increased by$101 million (259%) compared to the comparable prior year period due to higher volumes as well as higher material costs. Gross margin as a percentage of net sales was 8% and (15)% for the three months endedJune 30, 2021 and 2020, respectively, primarily due to higher material margins as the prior year period was negatively impacted by the effects of the COVID-19 pandemic.
Six Months Ended
Net sales for the six months endedJune 30, 2021 increased by$153 million (128%) compared to the comparable prior year period primarily due to higher volumes and higher selling prices. Cost of goods sold for the six months endedJune 30, 2021 increased by$128 million (103%) compared to the comparable prior year period due to higher volumes as well as higher material costs. Gross margin as a percentage of net sales was 8% and (3)% for the six months endedJune 30, 2021 and 2020, respectively, primarily due to higher material margins as the prior year period was negatively impacted by the effects of the COVID-19 pandemic. Real Estate Our Real Estate segment consists primarily of investment properties, the development and sale of single-family homes, and the management of a country club. Sales of single-family homes are included in net sales in our consolidated statements of operations. Results from investment properties and country club operations are included in other revenues from operations in our consolidated statements of operations. Revenue from our real estate operations for each of the six months endedJune 30, 2021 and 2020 were primarily derived from the sale of residential units and rental operations.
Home Fashion
Our Home Fashion segment is significantly influenced by the overall economic environment, including consumer spending, at the retail level, for home textile products.
Three Months Ended
Net sales for the three months endedJune 30, 2021 increased by$14 million (38%) compared to the comparable prior year period primarily due to the reduced impact of the COVID-19 pandemic on our Home Fashion segment's hospitality business. Cost of goods sold for the three months endedJune 30, 2021 increased$13 million (46%) compared to the comparable prior year period due to higher volumes as well as higher material and freight costs. Gross margin as a percentage of net sales was 20% and 24% for the three months endedJune 30, 2021 and 2020, respectively. The decrease is due to higher material and freight costs.
Six Months Ended
Net sales for the six months endedJune 30, 2021 increased by$5 million (6%) compared to the comparable prior year period primarily due to the reduced impact of the COVID-19 pandemic on our Home Fashion segment's hospitality business. Cost of goods sold for the six months endedJune 30, 2021 increased$6 million (9%) compared to the comparable prior year period due to higher volumes as well as higher material and freight costs. Gross margin as a percentage of net sales was 18% and 21% for the six months endedJune 30, 2021 and 2020, respectively. The decrease is due to higher material and freight costs. 49 Table of Contents Pharma
Our Pharma segment derives revenues primarily from the sale of its products directly to customers, wholesalers and pharmacies. To a lesser extent, our Pharma segment derives revenues through supply, licensing and royalty arrangements. We began consolidating our Pharma segment in the fourth quarter of 2020. For the three months endedJune 30, 2021 , our Pharma segment had$16 million of net product revenue,$2 million of supply revenue and$1 million of royalty revenue. For the six months endedJune 30, 2021 , our Pharma segment had$31 million of net product revenue,$16 million of supply revenue and$2 million of royalty revenue. For our Pharma segment's supply revenue,$13 million is attributable to the one-time sale of product to a single customer in the first quarter of 2021. Holding Company Our Holding Company's results of operations primarily reflect investment gains and losses from equity investments and the interest expense on its senior unsecured notes for each of the three and six months endedJune 30, 2021 and 2020.
Other Consolidated Results of Operations
Selling, General and Administrative
Three Months Ended
Our consolidated selling, general and administrative during the three months endedJune 30, 2021 increased by$14 million (5%) as compared the comparable prior year period primarily due to higher payroll related costs for our Automotive segment, impacted in the prior year period by the COVID-19 pandemic offset in part by planned store closures over the comparable periods, and the addition of the results of our Pharma segment, offset in part by lower costs resulting from our Real Estate segment, which incurred additional costs in the second quarter of 2020 relating to the demolition of one of its properties.
Six Months Ended
Our consolidated selling, general and administrative during the six months endedJune 30, 2021 increased by$22 million (4%) as compared the comparable prior year period primarily due to the addition of the results of our Pharma segment and higher compensation costs for our Investment segment, offset in part by lower costs resulting from planned store closures for our Automotive segment.
Interest Expense
Three Months Ended
Our consolidated interest expense during the three months endedJune 30, 2021 decreased by$16 million (9%) as compared the comparable prior year period. The decrease was primarily due to lower interest expense from our Investment segment attributable to a decrease in average due to broker balances over the respective periods, as well as lower interest expense for our Holding Company due to lower weighted average interest rates resulting from debt refinancings.
Six Months Ended
Our consolidated interest expense during the six months endedJune 30, 2021 increased by$7 million (2%) as compared the comparable prior year period. The increase was primarily due to higher interest expense from our Investment segment attributable to an increase in average due to broker balances over the respective periods offset in part by lower interest expense for our Holding Company due to lower weighted average interest rates resulting from debt refinancings. 50 Table of Contents Income Tax Expense
Certain of our subsidiaries are partnerships not subject to taxation in our condensed consolidated financial statements and certain other subsidiaries are corporations, or subsidiaries of corporations, subject to taxation in our condensed consolidated financial statements. Therefore, our consolidated effective tax rate generally differs from the statutory federal tax rate. Refer to Note 13, "Income Taxes," to the condensed consolidated financial statements for a discussion of income taxes.
Liquidity and Capital Resources
Holding Company Liquidity
We are a holding company. Our cash flow and our ability to meet our debt service obligations and make distributions with respect to depositary units will depend on the cash flow resulting from divestitures, equity and debt financings, interest income, returns on our interests in the Investment Funds and the payment of funds to us by our subsidiaries in the form of loans, dividends and distributions. We may pursue various means to raise cash from our subsidiaries. To date, such means include receipt of dividends and distributions from subsidiaries, obtaining loans or other financings based on the asset values of subsidiaries or selling debt or equity securities of subsidiaries through capital market transactions. To the degree any distributions and transfers are impaired or prohibited, our ability to make payments on our debt or distributions on our depositary units could be limited. The operating results of our subsidiaries may not be sufficient for them to make distributions to us. In addition, our subsidiaries are not obligated to make funds available to us and distributions and intercompany transfers from our subsidiaries to us may be restricted by applicable law or covenants contained in debt agreements and other agreements. As ofJune 30, 2021 , our Holding Company had cash and cash equivalents of approximately$1.5 billion and total debt of approximately$5.8 billion . As ofJune 30, 2021 , our Holding Company had investments in the Investment Funds with a total fair market value of approximately$4.7 billion . We may redeem our direct investment in the Investment Funds upon notice. See "Investment Segment Liquidity" below for additional information with respect to our Investment segment liquidity. See "Consolidated Cash Flows" below for additional information with respect to our Holding Company liquidity.
Holding Company Borrowings and Availability
June 30 ,December 31, 2021 2020 (in millions)
6.250% senior unsecured notes due 2022 $ - $ 1,209 6.750% senior unsecured notes due 2024
499 499
4.750% senior unsecured notes due 2024 1,105 1,106
6.375% senior unsecured notes due 2025 749 748
6.250% senior unsecured notes due 2026 1,250 1,250
5.250% senior unsecured notes due 2027 1,461 999
4.375% senior unsecured notes due 2029 747 -
$ 5,811 $ 5,811
Holding Company debt consists of various issues of fixed-rate senior unsecured
notes issued by the Issuers and guaranteed by Icahn Enterprises Holdings (the
"Guarantor"). Interest on each tranche of senior unsecured notes is payable
semi-annually.
In January 2021 , Icahn Enterprises and Icahn Enterprises Finance Corp. (together
the "Issuers") issued $750 million in aggregate principal amount of 4.375%
senior unsecured notes due 2029 (the "New 2029 Notes"). The proceeds from the
New 2029 Notes were used to redeem $750 million principal amount of 6.250%
senior unsecured notes due 2022, and to pay accrued interest, related fees and
expenses. Interest on the New 2029 Notes is payable semi-annually.
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InApril 2021 , the Issuers issued$455 million in aggregate principal amount of additional 5.250% senior unsecured notes due 2027. The proceeds from this issuance were used to redeem the remaining$455 million principal amount of 6.250% senior unsecured notes due 2022, and to pay accrued interest, related fees and expenses. Each of our senior unsecured notes and the related guarantees are the senior unsecured obligations of the Issuers and rank equally with all of the Issuers' and the Guarantor's existing and future senior unsecured indebtedness and senior to all of the Issuers' and the Guarantor's existing and future subordinated indebtedness. Each of our senior unsecured notes and the related guarantees are effectively subordinated to the Issuers' and the Guarantor's existing and future secured indebtedness to the extent of the collateral securing such indebtedness. Each of our senior unsecured notes and the related guarantees are also effectively subordinated to all indebtedness and other liabilities of the Issuers' subsidiaries other than the Guarantor. The indentures governing our senior unsecured notes described above restrict the payment of cash distributions, the purchase of equity interests or the purchase, redemption, defeasance or acquisition of debt subordinated to the senior unsecured notes. The indentures also restrict the incurrence of debt or the issuance of disqualified stock, as defined in the indentures, with certain exceptions. In addition, the indentures require that on each quarterly determination date,Icahn Enterprises and the guarantor of the notes (currently onlyIcahn Enterprises Holdings ) maintain certain minimum financial ratios, as defined therein. The indentures also restrict the creation of liens, mergers, consolidations and sales of substantially all of our assets, and transactions with affiliates. Additionally, each of the senior unsecured notes outstanding as ofJune 30, 2021 , except for the 4.750% senior unsecured notes due 2024, the 5.250% senior unsecured notes due 2027 and 4.375% senior unsecured notes due 2029, are subject to optional redemption premiums in the event we redeem any of the notes prior to certain dates as described in the indentures. As ofJune 30, 2021 andDecember 31, 2020 , we were in compliance with all covenants, including maintaining certain minimum financial ratios, as defined in the indentures. Additionally, as ofJune 30, 2021 , based on covenants in the indentures governing our senior unsecured notes, we are not permitted to incur additional indebtedness; however, we are permitted to issue new notes in connection with debt refinancings of existing notes.
2021 At-The-Market Offering
OnFebruary 26, 2021 ,Icahn Enterprises announced the commencement of its "at-the-market" offering pursuant to its Open Market Sale Agreement, pursuant to whichIcahn Enterprises may sell its depositary units, from time to time, during the term of the program ending onDecember 31, 2023 , for up to$400 million in aggregate sale proceeds. During the six months endedJune 30, 2021 ,Icahn Enterprises sold 6,618,919 depositary units pursuant to this agreement, resulting in gross proceeds of$384 million . As ofJune 30, 2021 ,Icahn Enterprises may sell its depositary units for up to an additional$16 million in aggregate sale proceeds pursuant to this agreement. No assurance can be made that any or all amounts will be sold during the term of the program.Icahn Enterprises' prior "at-the-market" offering was terminated onFebruary 26, 2021 .
LP Unit Distributions
During the six months endedJune 30, 2021 ,Icahn Enterprises declared two quarterly distributions aggregating$4.00 per depositary unit in which each depositary unitholder had the option to make an election to receive either cash or additional depositary units. In connection with these distributions, aggregate cash distributions to all depositary unitholders that made a timely election to receive cash was$56 million during the six months endedJune 30, 2021 . OnAugust 4, 2021 , the Board of Directors of the general partner ofIcahn Enterprises declared a quarterly distribution in the amount of$2.00 per depositary unit, which will be paid on or aboutSeptember 29, 2021 to depositary unitholders of record at the close of business onAugust 20, 2021 . Depositary unitholders will have untilSeptember 17, 2021 to make a timely election to receive either cash or additional depositary units. If a unitholder does not make a timely election, it will automatically be deemed to have elected to receive the distribution in additional depositary units. Depositary unitholders who elect to receive (or who are deemed to have elected to receive) additional depositary units will receive units valued at the volume weighted average trading price of the units during the 5 consecutive trading days 52
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endingSeptember 24, 2021 .Icahn Enterprises will make a cash payment in lieu of issuing fractional depositary units to any unitholders electing to receive (or who are deemed to have elected to receive) depositary units. The declaration and payment of distributions is reviewed quarterly byIcahn Enterprises GP's board of directors based upon a review of our balance sheet and cash flow, our expected capital and liquidity requirements, the provisions of our partnership agreement and provisions in our financing arrangements governing distributions, and keeping in mind that limited partners subject toU.S. federal income tax have recognized income on our earnings even if they do not receive distributions that could be used to satisfy any resulting tax obligations. The payment of future distributions will be determined by the board of directors quarterly, based upon the factors described above and other factors that it deems relevant at the time that declaration of a distribution is considered. Payments of distributions are subject to certain restrictions, including certain restrictions on our subsidiaries which limit their ability to distribute dividends to us. There can be no assurance as to whether or in what amounts any future distributions might be paid.
Investment Segment Liquidity
In addition to investments by us and
Additionally, our Investment segment liquidity is driven by the investment activities and performance of the Investment Funds. As ofJune 30, 2021 , the Investment Funds' had a net long notional exposure of 5%. The Investment Funds' long exposure was 108% (107% long equity and 1% long credit) and its short exposure was 103% (83% short equity and 20% short credit and other). The notional exposure represents the ratio of the notional exposure of the Investment Funds' invested capital to the net asset value of the Investment Funds atJune 30, 2021 . Of the Investment Funds' 108% long exposure, 102% was comprised of the fair value of its long positions (with certain adjustments) and 6% was comprised of single name equity forward contracts and credit contracts. Of the Investment Funds' 103% short exposure, 41% was comprised of the fair value of its short positions and 62% was comprised of short broad market index swap derivative contracts and short credit default swap contracts. With respect to both our long positions that are not notionalized (102% long exposure) and our short positions that are not notionalized (41% short exposure), each 1% change in exposure as a result of purchases or sales (assuming no change in value) would have a 1% impact on our cash and cash equivalents (as a percentage of net asset value). Changes in exposure as a result of purchases and sales as well as adverse changes in market value would also have an effect on funds available to us pursuant to prime brokerage lines of credit. With respect to the notional value of our other short positions (62% short exposure), our liquidity would decrease by the balance sheet unrealized loss if we were to close the positions at quarter end prices. This would be offset by a release of restricted cash balances collateralizing these positions as well as an increase in funds available to us pursuant to certain prime brokerage lines of credit. If we were to increase our short exposure by adding to these short positions, we would be required to provide cash collateral equal to a small percentage of the initial notional value at counterparties that require cash as collateral and then post additional collateral equal to 100% of the mark to market on adverse changes in fair value. For our counterparties who do not require cash collateral, funds available from lines of credit would decrease. 53 Table of Contents Other Segment Liquidity
Segment Cash and Cash Equivalents
Segment cash and cash equivalents (excluding our Investment segment) consists of
the following:
June 30, December 31,
2021 2020
(in millions)
Energy $ 519 $ 667
Automotive 53 25
Food Packaging 9 16
Metals - 1
Real Estate 35 21
Home Fashion 4 2
Pharma 9 8
$ 629 $ 740
Segment Borrowings and Availability
Segment debt consists of the following:
June 30, December 31,
2021 2020
(in millions)
Energy $ 1,693 $ 1,691
Automotive 342 368
Food Packaging 158 151
Metals 26 16
Real Estate 2 1
Home Fashion 33 21
$ 2,254 $ 2,248
Refer to our Annual Report on Form 10-K for the year ended
Our segments have additional borrowing availability under certain revolving credit facilities as summarized below:
June 30,
2021
(in millions)
Energy $ 396
Automotive 85
Food Packaging 19
Metals 66
Home Fashion 13
$ 579
The above outstanding debt and borrowing availability with respect to each of our continuing operating segments reflects third-party obligations.
InJune 2021 , CVR Partners issued$550 million in aggregate principal amount of 6.125% senior secured notes due 2028. Proceeds from these notes were used to fund a partial redemption of its existing 9.25% senior secured notes due 54
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2023. These senior secured notes issued by CVR Partners are guaranteed on a senior secured basis by all of CVR Partners' existing domestic subsidiaries, excludingCVR Nitrogen Finance Corporation . The indenture governing these notes contain certain covenants that restrict the ability of the issuers and their restricted subsidiaries from incurring additional debt or issuing certain disqualified equity, create liens on certain assets to secure debt, pay dividends/distributions or make other equity distributions, purchase or redeem capital stock/common units, make certain investments, transfer and sell assets, agree to certain restrictions on the ability of restricted subsidiaries to make distributions, loans, or other asset transfers to the issuers, consolidate, merge, sell, or otherwise dispose of all or substantially all of their assets, engage in transactions with affiliates and designate restricted subsidiaries as unrestricted subsidiaries. Subsidiary Dividends
In the second quarter of 2021, our Energy segment paid a special dividend, which was comprised of$241 million in cash as well as the common stock of an equity investment with a fair value of$251 million . Our portion of the dividend included$171 million in cash and the common stock of an equity investment with a fair value of$177 million .
Subsidiary Stock Repurchase Program
OnOctober 23, 2019 , the Board of Directors of CVR Energy approved a stock repurchase program which would enable it to repurchase up to$300 million of its common stock from time to time through open market transactions, block trades, privately negotiated transactions or otherwise in accordance with applicable securities laws. The stock repurchase program has a duration of four years, which may be terminated by the Board of Directors of CVR Energy at any time. Repurchases, if any, including the timing, price and amount, may be made at the discretion of CVR Energy management and CVR Energy is not obligated to make any repurchases. CVR Energy did not repurchase any shares of its common stock as ofJune 30, 2021 . Due to the market and oil price volatility, coupled with the current economic conditions, CVR Energy does not currently intend to repurchase any stock if these, and other, conditions continue. OnMay 6, 2020 , the Board of Directors of CVR Partners' general partner approved a unit repurchase program which would enable it to repurchase up to$10 million of its common units from time to time through open market transactions, block trades, privately negotiated transactions or otherwise in accordance with applicable securities laws. OnFebruary 22, 2021 , the Board of Directors of CVR Partners authorized an additional$10 million under the unit repurchase program. During 2021, CVR Partners repurchased common units on the open market at a cost of$1 million . As ofJune 30, 2021 , CVR Partners has$12 million remaining under its unit repurchase program.
Consolidated Cash Flows
Our Holding Company's cash flows are generally driven by payments and proceeds associated with our senior unsecured debt obligations and payments and proceeds associated with equity transactions withIcahn Enterprises' depositary unitholders. Additionally, our Holding Company's cash flows include transactions with our Investment and other operating segments. Our Investment segment's cash flows are primarily driven by investment transactions, which are included in net cash flows from operating activities due to the nature of its business, as well as contributions to and distributions fromMr. Icahn and his affiliates (includingIcahn Enterprises andIcahn Enterprises Holdings ) andBrett Icahn , which are included in net cash flows from financing activities. Our other operating segments' cash flows are driven by the activities and performance of each business as well as transactions with our Holding Company, as discussed below. 55 Table of Contents
The following table summarizes cash flow information for
Six Months Ended June 30, 2021 Six Months Ended June 30, 2020
Net Cash Provided By (Used In) Net Cash Provided By (Used In)
Operating Investing Financing Operating Investing Financing
Activities Activities Activities Activities Activities Activities
(in millions)
Holding Company $ (193) $ 500 $ 319 $ (190) $ (902) $ (922)
Investment (384) - 46 (850) - 751
Other Operating Segments:
Energy 243 (141) (250) (49) (361) 364
Automotive (11) 23 14 (50) (11) 58
Food Packaging (13) (6) 6 (9) (6) 1
Metals (7) (1) 7 (3) (1) 1
Real Estate 14 (4) 7 15 (9) (4)
Home Fashion (14) (1) 11 (2) (3) 6
Pharma 1 - - - - -
Other operating segments 213 (130) (205) (98) (391) 426
Total before eliminations (364) 370 160 (1,138) (1,293) 255
Eliminations - (124) 124 - 787 (787)
Consolidated $ (364) $ 246 $ 284 $ (1,138) $ (506) $ (532)
Eliminations
Eliminations in the table above relate to certain of our Holding Company's transactions with our Investment and other operating segments. Our Holding Company's net (investments in) distributions from the Investments Funds, when applicable, are included in cash flows from investing activities for our Holding Company and cash flows from financing activities for our Investment segment. Similarly, our Holding Company's net distributions from (investments in) our other operating segments are included in cash flows from investing activities for our Holding Company and cash flows from financing activities for our other operating segments. Holding Company
Our Holding Company's cash flows from operating activities for each of the six months endedJune 30, 2021 and 2020 were primarily attributable to our semi-annual interest payments on our senior unsecured notes. The decrease in interest payments over the comparable periods is due to the timing of the payment of the semi-annual interest as our recent debt transactions resulted in a change in certain interest payment dates as well as a lower weighted average interest rate over the comparative periods. Our Holding Company also had lower interest income and tax receipts during the six months endedJune 30, 2021 compared to the comparable prior year period. Our Holding Company's cash flows from investing activities for the six months endedJune 30, 2021 were primarily attributable to proceeds from the sale of equity investments of$376 million and dividends from our Energy segment of$171 million offset in part by net investments in/contributions to our operating subsidiaries aggregating$47 million , including an investment in our Automotive segment of$50 million . Our Holding Company's cash flows from investing activities for the six months endedJune 30, 2020 were primarily due to our investment in the Investment Funds of$750 million (net of redemptions), our purchase of an equity investment of$114 million and investments in/contributions to our operating subsidiaries aggregating$130 million , including an investment in our Automotive segment of$115 million . This was offset in part by net cash dividends from our Energy segment of$85 million and distributions from our Real Estate segment of$8 million .
Our Holding Company's cash flows from financing activities for the six months
ended
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Holding Company's cash flows from financing activities for the six months endedJune 30, 2020 were primarily due to the effects of certain debt refinancing transactions, which included the repayment of certain senior unsecured notes inJanuary 2020 using proceeds from senior unsecured note issuances inDecember 2019 , and aggregate payments on our quarterly distributions. This was offset in part by proceeds from our "at-the-market" offering.
Investment Segment
Our Investment segment's cash flows from operating activities for the comparable periods were attributable to its net investment transactions.
Our Investment segment's cash flows from financing activities for the six months endedJune 30, 2021 were attributable toBrett Icahn's contribution to the Funds of$46 million . Our Investment segment's cash flows from financing activities for the six months endedJune 30, 2020 were attributable to our investment in the Investment Funds of$750 million , net of redemptions, and$1 million fromMr. Icahn and his affiliates (excluding us).
Other Operating Segments
Our other operating segments' cash flows from operating activities included net cash flows from operating activities before changes in operating assets and liabilities of$(74) million and$(11) million for the six months endedJune 30, 2021 and 2020, respectively, primarily due to the result of our Energy and Automotive segments for each period. The change in cash flows from operating activities for the six months endedJune 30, 2021 as compared to the comparable prior year period was primarily due to changes in working capital attributable to our Energy segment. Our Energy segment's working capital improved over the comparable periods primarily due to the increase in crude oil prices during 2021 and increases in its open RFS position. Our other operating segments' cash flows from investing activities were primarily due to the purchase of investments of zero in 2021 compared to$140 million in 2020 and due to capital expenditures of$158 million in 2021, primarily for our Energy segment's RDU project, and$115 million in 2020, primarily within our Energy and Automotive segments for both periods. In addition, our Energy segment acquired a pipeline for cash consideration of$20 million in the first quarter of 2021. Our other operating segments' cash flows from financing activities were primarily due to net debt transactions. In 2020, our Energy segment had net proceeds from senior debt transactions of$500 million . In addition, our other operating segments also had net distributions to our Holding Company aggregating$124 million for the six months endedJune 30, 2021 compared to net contributions aggregating$37 million for the six months endedJune 30, 2020 , as described above. For the six months endedJune 30, 2021 and 2020, our Energy segment had distributions to non-controlling interests of$70 million and$36 million , respectively.
Consolidated Capital Expenditures
There have been no material changes to our planned capital expenditures as
compared to the estimated capital expenditures for 2021 reported in our Annual
Report on Form 10-K for the year ended
Critical Accounting Estimates
The critical accounting estimates used in the preparation of our condensed consolidated financial statements that we believe affect our more significant judgments and estimates used in the preparation of our condensed consolidated financial statements presented in this Report are described in Management's Discussion and Analysis of Financial Condition and Results of Operations and in the Notes to the consolidated financial statements included in our Annual Report on Form 10-K for the year endedDecember 31, 2020 .
There have been no material changes to our critical accounting policies and
estimates during the six months ended
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Recently Issued Accounting Standards
Refer to Note 2, "Basis of Presentation and Summary of Significant Accounting Policies," to the condensed consolidated financial statements for a discussion of recent accounting pronouncements applicable to us.
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