Q3 2020 Icahn Enterprises LP Earnings Call

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Ladies and gentlemen, thank you for standing by and welcome to the third quarter 2020, Icahn Enterprises earnings Conference call.

At this time all participants lines are in listen only mode. After the speakers presentation to be a question and answer session to ask a question during that time each press star one of your telephone.

We beat by today's conference is being recorded if you require any further assistance. Please press star zero I will need to end the conference over to your speaker today Jesse Lynn. Thank you good question.

Thank you operator.

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 forward looking statements may be identified by words, such as expects anticipates intends plans believes.

Seeks estimates will or words of similar meeting and include but are not limited to statements about the expected future business and financial performance of Icahn Enterprises Ltd, and its subsidiaries Act.

Actual events results and outcomes may differ materially from our expectations due to a variety of known and unknown risks uncertainties and other factors that are discussed in our filings with the securities and Exchange Commission, including economic competitive legal and other factors, including related to the severity magnitude and duration of the COVID-19 pandemic.

Accordingly, there is no assurance that our expectations will be realized we assume no obligation to update or revise any forward looking statements should circumstances change, except as otherwise required by law.

This presentation also includes certain non-GAAP financial measures a reconciliation of such non-GAAP financial measures to the most directly comparable GAAP financial measures can be found in the back of this presentation.

Ill now turn it over to Keith Cozza, our Chief Executive Officer.

Thanks Jesse.

Good morning, and welcome to the third quarter 2020, Icahn Enterprises earnings Conference call.

Joining me on today's call is someone 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.

For Q3, 2020, we had a net loss attributable to Icahn enterprises of 714 million or $3.14 per LP unit compared to a net loss of 49 million or 24 cents per LP unit in the prior year period.

The quarterly loss was primarily driven by losses in our investment segment.

Adjusted EBITDA attributable to Icahn enterprises for Q3, 2020 was a loss of 550 million compared to a loss of 121 million in Q3 of 2019.

Our investment funds are into negative return of 11.8% in Q3 of 2020 compared to a negative return of 7.4% for Q3 of 2019.

The negative performance was driven by net losses in both our short index and short single name equity positions as well as certain long equity positions in the energy industry.

Net sales for our energy segment decreased by 617 million for Q3 of 2020 compared to the prior year period.

Our petroleum business was negatively impacted by narrow crack spreads tight crude oil differentials that resulted from COVID-19 demand destruction and the global crude oil price wars and high RIN prices.

Our fertilizer segment had strong utilization rates at both facilities offset by a weaker price environment as agricultural markets continued to be hampered.

Net sales and service revenues for our automotive segment were 660 million for Q3 of 2020.

The COVID-19 pandemic and the impacts of the actions taken by governments and others have significantly contributed to the decline in revenues.

I cant automotive group continues to push forward with the multi year transformational plan to restructure the operations and improve profitability.

We have made significant progress separating our automotive service business from our aftermarket parts business and are on track to substantially complete the separation by the end of this year.

On October 1st we announced an agreement with bread icon to return to IP and join our board of directors.

Pursuant to the agreement bread icon in a new team of portfolio managers will manage a portfolio of assets within our investment segment over a seven year term.

We also announced the adoption of management succession plan pursuant to which it is currently anticipated that bread icon will succeed Carl Icahn as chairman of IP and CEO of our investment segment. Following the end of the seven year term.

We closed the quarter with cash and investments in the funds have over 5.1 billion and continue to look for investment opportunities that fit a favorable risk reward profile.

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 comment on the strength of our balance sheet.

For Q3, 2020 net loss attributable to Icahn enterprises was $714 million, that's compared to a net loss of $49 million in the prior year period.

As you can see on slide five.

In Q3 2020, the performance of our investment funds was a significant driver of our net loss for the quarter.

Adjusted EBITDA attributable to Icahn enterprises for Q3, 2020 was a loss of $550 million compared to a loss of $121 million in the prior year period.

I will now provide more detail regarding the performance of our segments.

Our investment segment had net loss attributable to Icahn enterprises of $543 million for Q3 2020.

The investment funds had a negative return of 11.8% in Q3 2020 compared to a negative return of 7.4%.

For Q3 2019.

Long positions had a negative performance attribution of 3% for the current quarter, while short positions had a negative performance attribution of 8.8%.

Since inception in November 2004 through the end of Q3 2020, the investment funds gross return is 64% or 3% annualized.

The investment funds had a net long.

Notional exposure of 8% compared to net short of 48% at the end of Q2 2020.

Our investment in the funds was $4 billion as of September Thirtyth 2020.

Now to our energy sector.

For Q3 2020, our energy segment reported net sales of $1 billion and consolidated adjusted EBITDA of a loss of $39 million compared to net sales of $1.6 billion and consolidated adjusted EBITDA of $235 million for the prior year.

Period.

The Q3 2020 EBITDA loss includes a loss of $65 million related to CV ours investment at Delek.

Q3, 2020, combined total throughput was approximately 201000 barrels per day compared to approximately 222000 barrels per day for Q3 2019.

This decrease was primarily attributable to a change in the crude slate towards maximizing light crude and weather related power issues.

Refining margin per throughput barrel was $5.47 in the third quarter of 2020 compared to $16.34. During the same period in 2019.

The refining margin was significantly impacted by narrow crack spreads and tight crude differentials as low air travel continues to force excess jet fuel into the diesel fuel market, resulting in lower diesel prices.

CVR partners reported Q3, 2020, EBITDA of $15 million compared to $11 million in Q3 2019.

Well you weigh in volumes increased 7% you land prices were down 23% due to low natural gas prices.

CVR energy did not declare a dividend this quarter as it evaluates various investment opportunities, including renewable diesel.

Now turning to our automotive segment.

Q3, 2020, net sales and service revenues for icon automotive group were $660 million down $84 million from the prior year period with $48 million of the decline related to store closures and the remainder primarily related to the sales slowed down due to Cove at night.

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Q3, 2020 adjusted EBITDA.

Which excludes losses associated with close stores was $6 million.

Compared to a loss of $23 million in the prior year period.

I Kinda automotive continues to push forward with a multiyear transformation plan to restructure the operations and improve profitability.

I can auto accelerated closures of certain parts stores adjusted store hours and staffing to match reduced demand implemented.