Q1 2022 Icahn Enterprises LP Earnings Call
Good morning, and welcome to the Icahn Enterprises L. P.
First quarter 2022 earnings call Winthrop plant director of accounting.
David Willetts, President and CEO and Ted a couple of parts of it.
Chief Financial Officer.
Like to hand, the call over to Bob.
Read the opening statement.
Thank you operator.
The private Securities Litigation Reform Act of 1995 provides a safe harbor for forward looking statements we make in this presentation.
Clothing statements regarding our future performance and plans for our businesses and potential acquisitions.
Forward looking statements maybe identified by words, such as expects anticipates intends plans believes seeks estimates will or words of similar meaning and include but are not limited to statements about the expected future business and financial performance of Icahn enterprises and its subsidiary.
Yes.
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 security and exchange Commission, including economic competitive legal and other factors, including the severity magnitude and duration.
<unk> of the COVID-19, pandemic and its impact on the global economy financial markets and industries in which our subsidiaries operate.
The impacts from the Russia, Ukraine conflict, including economic volatility and the impact of export controls and other economic sanctions.
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.
The 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.
I'll now turn it over to David Willis, our Chief Executive Officer.
Thank you, Rob and good morning, and welcome to the first quarter 2022, Icahn Enterprises earnings call.
Joining me on today's call is Tiptop of postal Lou <unk>, our Chief Financial Officer, together, we will provide an overview of the first quarter results and then will be available for questions.
As we've said before we believe activism is the best paradigm for Augusta, We're pleased with our current activist campaign at southwest gas and encourage investors to refer to our public filings and statements to stay apprised of the latest developments.
IP is reporting first quarter 2022 revenues of $4 1 billion and net income attributable to icahn enterprises of $323 million or $1 six per depository unit.
This represents an increase in net income per depository unit or <unk> 41 versus quarter one of 2021.
The three months ended March 31, 2021 revenues were $3 4 billion and net income attributable to Icahn enterprises was $162 million or 65% 65 per depository unit.
For the three months ended March 31, 2022, adjusted EBITDA attributable to Icahn enterprises was $616 million compared to $435 million for the three months ended March 31 2021.
Indicative net asset value increased by $1 1 billion as of March 31, 2022, compared to December 31 2021 the.
The change in indicative net asset value includes among other things changes in the fair value of certain subsidiaries, which are not included in our GAAP earnings reported about.
Regarding our segments, our investment funds had a strong performance for the quarter with a positive return of nine 6% quarter one of 2022.
Primarily driven by movements in our energy investments and our investment funds, we generally take a value investing approach and our long positions and we frequently use shorts to selectively hedge market crashed.
CBI ended the first quarter 2022, EBITDA and net income with improvements, reflecting strong performance in the fertilizer segment and improved crack spreads and refining.
<unk> costs continued to negatively impact refining cost you more than a $107 million for the quarter.
The company is aggressively pursuing its portion of the renewables with a startup of the biodiesel unit hit when he would and CVR announced a dividend of <unk> 40 per share and announced a substantial dividend of $2 26, and its distribution to its unit holders.
Automotive services continued its strong upward trajectory and the team is executing a multiyear improvement plan.
Services is in a strong position given the increasing age of the car parts and is benefiting from a growing number of vehicles older than three years on the road today.
<unk> parts business continues to stabilize and actively working down excess inventory.
It was the quarter with cash and investments in the funds of approximately 6 billion.
We paid down $500 million of debt, resulting in interest expense savings of $34 million on an annual basis.
The board declared a $2 quarterly distribution payable in cash or additional units.
With that let me turn it over to Ted for a detailed discussion of our segments and our performance Kevin. Thanks.
Thanks, David I'll begin by reviewing our consolidated results and then highlight the performance of our operating segments and comment on the strength of our balance sheet for Q1 'twenty. Two we had net income attributable to IP of $323 million compared to net income of $162 million in Q1 'twenty one.
For Q1, 'twenty, two adjusted EBITDA attributable to IEP was $616 million compared to $435 million in the prior year quarter.
I will now provide more detail regarding the performance of our individual segments.
The investment funds had a return of nine 6% for Q1, 'twenty two compared to a return of nine 2% in the prior year quarter Q1, 'twenty. Two returns were primarily driven by the net positive performance of our energy sector investments.
Long positions had a positive performance attribution of 15, 1% in Q1, 'twenty two while short positions and other had a negative performance attribution of five 5%.
The investment funds had a net short notional exposure of 21% at the end of the quarter compared to a net short notional exposure of 31% at the end of the year.
Our investment in the funds was approximately $4 7 billion as of quarter end.
Now to our energy segment.
In Q1, 'twenty two our energy segment reported net sales of $2 4 billion compared to $1 5 billion in the prior year quarter consolidated adjusted EBITDA was 278 million for Q1, 'twenty two compared to zero in Q1 of 'twenty one.
CVR declared a first quarter dividend of <unk> 40 per share.
Total throughput was approximately 197000 barrels per day in Q1 dollars 22 compared to 186000 in Q1 'twenty one.
Q1, 'twenty two refining margin per throughput barrel was $16 75.
Compared to $3 <unk> in the prior year quarter.
This was primarily due to higher crack spreads and an increase in crude oil prices.
Cost of Rins continued to have a negative impact on our refining business for Q1 'twenty two the rins expense was $107 million.
CVR is focused on de carbonization and announced the plan to segregate, it's renewables business in order to better align its organizational structure with management financial reporting and its skull to maximize renewables focus.
During the quarter the company completed the conversion of the hydro cracker at one of its refineries and successfully started to renewable diesel unit.
CVR partners reported Q1, 'twenty to EBITDA of $123 million compared to $5 million for Q1 'twenty one.
Q1, 'twenty two average realized gate prices for <unk> and improved by 212% to $496 per ton and ammonia improved by 252% to $1055 per ton when compared to Q1 of 'twenty one.
CVR partners declared a first quarter cash distribution of $2 26 per unit.
Now to our automotive segment.
Q1, 'twenty two net sales and service revenues for the automotive segment were $554 million, a decrease of $44 million from the prior year quarter store closures relating to the transformation plan accounted for a decrease of $77 million on an organic basis service revenue was up $26 million in aftermarket parts sales were up seven.
Yeah.
Q1, 'twenty two adjusted EBITDA was a loss of $2 million compared to a loss of $9 million in Q1 of 'twenty one.
Adjusted EBITDA excludes transformation losses associated with store closures, which was $14 million for Q1 'twenty two.
And now turning to our food packaging segment.
Q1, 'twenty two net sales and adjusted EBITDA were flat compared to prior year quarter volumes were slightly down and there were headwinds with inflationary raw material pricing and transportation costs, which were offset by positive pricing initiatives, especially in the U S.
And turning to our real estate segment.
Q1, 'twenty two net sales and other revenues increased by $11 million compared to the prior year quarter. Adjusted EBITDA was $6 million for Q1, 'twenty two compared to 2 million for Q1 'twenty one.
Segment remains highly focused on increasing occupancy across the portfolio.
Our new C. Berry property continues to perform above expectations and both club operations and development activities and our Aruba resort has rebounded strongly due to the reduced impact of COVID-19.
And now to our home fashion segment.
Q1, 'twenty two net sales increased by $14 million as compared to the prior year quarter, primarily due to the increase in demand for its hospitality business do.
Due to the reduced impact of the COVID-19 impact.
Adjusted EBITDA was 1 million for Q1, 'twenty, two as compared to a loss of $2 million in Q1 of 'twenty one.
Now turning to our pharma segment.
For Q1, 'twenty two net operating revenues were $16 million and adjusted EBITDA was $2 million pancreas and Qsymia, both had strong prescription growth at 12, and 8% respectively compared to the prior year quarter.
Lee This is executing on its plan to expand the geographic reach of Qsymia into Europe , which is expected to launch in Q1 of 2023.
Now I'll discuss our liquidity position.
We maintain ample liquidity at the holding company and at each of our operating subsidiaries to take advantage of attractive opportunities. We ended the quarter with cash cash equivalents, our investment in the investment funds and subsidiary revolver availability totaling approximately $7 billion.
Our subsidiaries have approximately $791 million of cash and $443 million of Undrawn credit facilities to enable them to take advantage of attractive opportunities.
In summary, we continue to focus on building asset value and maintaining ample liquidity to enable us to capitalize on opportunities within and outside our existing operating segments.
Thank you operator can you. Please open the call up for questions.
As a reminder to ask a question you will need to press star one on your telephone and wait for your question insurance principle whiskey placed in bio composite roster.
All right.
That will come from the line of Dan Fannon of Jefferies. Your line is open.
Hi, This is actually doing chi on for Dan. So thanks for taking my questions.
Just to start maybe just given the current market backdrop with both with the fed and some of the geopolitical risks that we're seeing I'm just curious on how your how is your portfolio positioned differently now versus in the past and then maybe any color on how you would sort of navigate that going forward that would be helpful. Thanks.
Sure.
I think I think the.
The opening comments I made are probably pretty relevant over the last few calls.
We're fundamentally a value investor and we have employed a strategy.
Longs looking at value.
And we use market hedges selectively to hedge our positions and in some quarters that has presented a real challenge for us as the market goes up and down but this is the type of market that you actually hedge your portfolio for so there is no change in our strategy. We continually re look at all of our positions longs and shorts.
But we believe this is a market that really proves out what we've been doing for the last gosh knows how many years.
And in terms of the Crystal ball for the future market.
I think if we all have that answer we'd feel much more comfortable so we won't speculate on the market and what's happening other than to say, it's going to be a very interesting rest of this year.
Understood. That's helpful. And then maybe just in terms of new investments.
Specifically within this type of market backdrop in any direction or any segments of the market that you think do you think is more attractive for your style of investments today.
Okay.
What I would encourage you to do is look at our statements when they make them in terms of when we announced an investment.
I would just underscore we look for value.
This market is definitely a market where there are opportunities and there are risks. So I wouldn't say, we have any unusual focus other than we're continuously screening for deep value opportunities.
Yeah. That's helpful. Thank you that's it from me.
Youre welcome.
And once again Thats star one for a question Star one.
Our next question comes from the line of Andrew Berg from post Advisory group.
Again.
Thanks, Hey, just a quick question related to the debt repayment in February was that all funded out of cash at the holding company.
Or were there some funds are removed from the hedge funds that were upstream to the holding company to help pay for that.
If you wanted to get I was yes.
Yeah, Hey, Andrew No. It was all taken from the holding company, we didn't need to redeem from the funds.
Okay, great. Thank you.
Okay.
Yeah.
Once again star one for a question Star one one moment for questions.
Yeah.
I'm not showing any further questions into queue I like to turn call back over to the al <unk> for any closing remarks.
Okay.
Well. Thank you all very much we will all see you.
In roughly one quarter's time, when we discuss quarter too.
And in the interim if you do have any questions. Please go to our website you can connect to the investor.
Investor portal or hotline and raise any questions.
Thank you very much and have a good day.
This concludes today's conference call. Thank you for participating you may now disconnect everyone have a great day.
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