Icahn Enterprises L.P. Q1 2023 Earnings Call

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Okay.

Good morning, and welcome to the Icahn Enterprises L. P Q1, 2023 earnings call with Jesse Lynn General Counsel, David Willett, President and CEO and Ted coupled the Stokes Chief Financial Officer, I would now like to hand, the call over to Jesse Lynn who will read the opening statement.

Yeah.

Thank you operator, the private Securities Litigation Reform Act of 1995 provides a safe harbor for forward looking statements we make in this presentation.

Statements regarding our future performance and plans for our businesses and potential acquisitions.

Forward looking statements, Matt maybe identified by words, such as expects anticipates intends plans believes seeks estimates will or words of similar meaning that include but are not limited to statements about the expected future business.

Actual performance of Icahn enterprises L P and its subsidiaries.

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 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.

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 and.

Now I'll turn it over to David Willis, our Chief Executive Officer.

Thank you Jessie.

Good morning, and welcome to the first quarter 2023, Icahn Enterprises earnings Conference call.

Joining me on today's call as Ted proposed to Lou <unk>, Our Chief Financial Officer, together will provide an overview of Q1 results and then be available for questions.

Before we get into the results of the quarter I need to address the short seller report ish released last week.

After this call we will issue response, which addresses the mis characterizations and concerns raised in this report.

There are a few high level points I'd like to address now.

IP has $1 $9 billion of cash on hand, and $4 billion.

Additional liquidity in the investment funds and we're well positioned for future success.

We have full confidence in the integrity of our presented financials in our reporting.

Our dividend policy is based on our assessment of Aep's ability to returning capital to unitholders over the long term basis with.

We generate liquidity through our operations selling investments and selling companies. Since 2017. The firm has generated over $5 billion of cash from successful sales of controlled companies.

Our operating companies have been the subject of intense improvement efforts over the last year.

Although not complete we are pleased with the trajectory of the companies, we've upgraded and augmented many of our companies management teams and we're starting to see tangible improvements in our results and overall performance of the companies we have great confidence in their production.

On our first quarter results. Our results for Q1 2023 were down versus prior year included a large one time noncash charge for the auto plus bankruptcy up $226 million.

For quarter, one we had a loss of $270 million.

Just the EBITDA of $116 million compared to net income of $323 million and adjusted EBITDA of $616 million for three months ended March 31 2022.

For quarter, one 2023, our investment funds had a negative return of four 1%, reflecting the volatility we're seeing in certain markets.

CBI ended the quarter with continued strong performance largely due to an $11 96, increasing quarter, one crack spreads in 2023 versus 2022 with flat volumes.

CVR declared a dividend of <unk> 50 per share for 2023.

CVR partners also called Uhm performed relatively flat in quarter, one 2023 compared to prior year largely due to decreased pricing for ammonia in UAE.

For automotive services revenue growth remained strong at over 5% for the first quarter compared to prior year.

The team is aggressively working with our vendors to simplify our supply chain reduce materials costs and greatly reduce working capital contracts are in the process of being finalized amicus. We forecast continued improvements in the back half of 2023.

Our indicative net asset value as of quarter end remained relatively flat at $5 6 billion as compared to December 31 2022.

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 above.

The IEP 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 all of our segments.

Thank you David.

I will 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. Three we had net loss of $270 million and adjusted EBIT of $160 million compared to net income of $323 million and adjusted EBITDA of $616 million for Q1 'twenty two.

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

The investment funds had a negative return of four 1% for the quarter, which was driven primarily by our short positions offset in part by positive performance from three healthcare sector investors.

For the quarter long positions and other had positive performance attribution of one three and 8% respectively. While short positions had a negative performance attribution of six 2%.

The investment funds had a net short notional exposure of 38% at the end of Q1 compared to a net short notional exposure of 47% at year end.

Our investment in the funds was approximately $4 billion as of quarter end.

And now to our energy segment.

In Q1, 'twenty three our energy segment reported net sales of $2 3 billion compared to $2 4 billion in the prior year quarter. Adjusted EBITDA was $229 million for Q1 dollars 23, compared to 142 million for Q1 'twenty two.

Q1, 'twenty three refining margin per throughput barrel was $23 24.

Compared to $16 75 in the prior year quarter. This increase was primarily due to widening crack spreads.

Cost of Rins continue to have a negative impact on our refining business with $39 million of related expense in the quarter.

Q1, 'twenty three average realized gate prices for <unk> decreased by 8% to $457 per ton and ammonia decreased by 16% to $888 per ton when compared to the prior year quarter.

And now to our automotive segment.

Q1, 'twenty three adjusted EBITDA was 21 million a $23 million improvement as compared to Q1 'twenty to the service business contributed $6 million of improvement, while the deconsolidation of auto plus contributed $17 million Q.

Q1, 'twenty three net sales and other revenues for the auto segment were $457 million, a decrease of $106 million from prior year quarter. The decrease in revenue is primarily due to the deconsolidation of auto plus automotive service revenues were up $16 million in automotive parts revenues are down to $129 million.

During the quarter auto pluses carrying value was removed due to the bankruptcy.

This resulted in a noncash charge of 226 million, which was recorded within the holding company segment.

Now to our real estate segment.

Q1, 'twenty three net sales and other revenues decreased by $5 million compared to the prior year quarter. Adjusted EBITDA was $3 million for Q1 dollars 23, compared to 6 million for Q1 'twenty. Two the decrease was primarily attributable to the sale of finished lots within the development business during 'twenty, two which was offset in part.

By an increase in leasing revenues during 'twenty three.

The resort business was flat year over year.

Subsequent to quarter end, we terminated a lease with a tenant for nonpayment at a commercial high rise property, we consider the termination along with other facts and circumstances are.

Triggering event for potential impairment and we will assess the impact during the second quarter.

The property had a net book value of $218 million of which 85 of that was <unk>.

Land value.

Any potential impairment cannot be estimated at this time.

Now turning to our other segments.

Q1, 'twenty three net sales and other revenues for all other operating segments were relatively flat as compared to the prior year quarter.

These cases, adjusted EBITDA improved by $4 million or <unk>, 31% for Q1, 'twenty three as compared to the prior year quarter. The company improved manufacturing efficiencies compared to prior periods and the team has done a great job managing costs hone.

Home fashions, adjusted EBIT decreased by $1 million as compared to the prior year quarter. They continue to be negatively impacted by the retail business and particularly in E. Com E Commerce.

The pharma segment's adjusted EBIT for Q1, 'twenty, three improved by $1 million as compared to the prior year quarter. The management team is focused on the expansion of Qsymia in various territories.

Now to our liquidity.

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 funds and revolver availability totaling approximately $6 9 billion.

Our subsidiaries have approximately $740 million of cash and $305 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 liquidity to enable us to capitalize on opportunities within and outside our existing operating segments.

Thank you operator can you please open up the call for questions.

And to ask a question simply press Star one one on your telephone to get in the queue.

To remove your question. Please press star one again.

One moment, while we compile the Q&A roster.

Yeah.

Again that is star one one to get in the queue one moment. Please.

Ladies and gentlemen that is star one one.

Have a question.

Okay, apparently there are no questions. We thank you for your time.

Do encourage you all to look forward to look for the report we're issuing in response to the short seller report it should be issued approximately around 11 o'clock today.

Forward to talking to you on the next quarterly call take care.

And thank you for your participation and you may now disconnect.

Okay.

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Yes.

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