Q4 2024 Icahn Enterprises L.P. Earnings Call

Okay.

Robert: We'll have Andrew <unk>, President and CEO, Ted pop up a stove Chief financial Officer, and Robert Flint, Chief Accounting Officer, I would now like to hand, the call over to Robert who will read the opening statement.

Thank you for watching!

Robert Flint: Thank you operator.

Robert Flint: The 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.

Robert Flint: 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 L P and.

We'll have Andrew Turner, President and CEO Tad pop up with stone, Chief Financial Officer, and Robert Flint, Chief Accounting Officer, I would now like to hand, the call over to Robert who will read the opening statement.

Robert Flint: Subsidiaries.

Robert Flint: 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.

Thank you operator.

The 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.

Robert Flint: Including economic competitive legal and other factors.

Robert Flint: Accordingly, there is no assurance that our expectations will be realized.

Forward looking statements maybe identified by words, such as expects anticipates intends plans believes seeks estimates will.

Robert Flint: We assume no obligation to update or revise any forward looking statements should circumstances change, except as otherwise required by law.

Words of similar meaning and include but are not limited to statements about the expected future business and financial performance of Icahn Enterprises L P and its subsidiaries.

Robert Flint: This presentation also includes certain non-GAAP financial measures, including adjusted EBITDA.

Robert Flint: 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.

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.

Robert Flint: We also present indicative net asset value indicative net asset value includes among other things changes in the fair value of certain subsidiaries, which are not included in our GAAP earnings.

Including economic competitive legal and other factors.

Robert Flint: All net income and EBITDA amounts, we will discuss our attributable to icahn enterprises unless otherwise specified.

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.

Speaker Change: Now I'll turn it over to Andrew <unk>, our Chief Executive Officer.

Andrew: Thank you, Rob and good morning, everyone.

This presentation also includes certain non-GAAP financial measures, including adjusted EBITDA.

Andrew: <unk> decreased $223 million from the third quarter of 2024.

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.

Andrew: Two big events during the quarter, where the decline in CVR energy and an agreement to sell certain properties in our real estate segment.

We also present indicative net asset value indicative net asset value includes among other things changes in the fair value of certain subsidiaries, which are not included in our GAAP earnings.

Andrew: CVI declined by $286 million in the quarter as we discussed on the last call crack spreads weakened in the fourth quarter and when combined with the large turnaround led CVI to cut its dividend.

All net income and EBITDA amounts, we will discuss our attributable to icahn enterprises unless otherwise specified.

Andrew: In response to what we believed was an attractive investment opportunity, we launched a tender offer and we're successful in purchasing 878000 shares.

Andrew <unk>: Now I'll turn it over to Andrew <unk>, our Chief Executive Officer.

Andrew Turner: Thank you, Rob and good morning, everyone.

Andrew: This is less than we had hoped for but we will remain price sensitive and monitor conditions going forward.

Andrew Turner: <unk> decreased $223 million from the third quarter of 2024.

Andrew: Recently crack spreads have improved off their loads, which bodes well for CVI.

Speaker Change: Two big events during the quarter, where the decline in CVR energy and an agreement to sell certain properties in our real estate segment.

In addition, we are excited that the change in administration may lead to the resolution of our outstanding litigation regarding small refinery exemptions, which has the potential to remove over $300 million or more of liabilities. As a reminder, during the last Trump administration when he would receive small refinery exemptions.

Speaker Change: CVI declined by $286 million in the quarter as we discussed on the last call crack spreads weakened in the fourth quarter and when combined with the large turnaround led CVI to cut its dividend.

Speaker Change: In response to what we believed was an attractive investment opportunity, we launched a tender offer and we're successful in purchasing 878000 shares.

Andrew: Our real estate segment increased $292 million in the quarter. The increase was due to a combination of the sale of certain properties, which led us to fair value of the remaining assets are changed from how we have valued these assets in prior periods.

Speaker Change: This is less than we had hoped for but we will remain price sensitive and monitor conditions going forward.

Speaker Change: Recently crack spreads have improved off their lows, which bodes well for CVI.

Andrew: GAAP equity attributable to IEP in real estate held steady.

Speaker Change: In addition, we are excited about the change in administration may lead to the resolution of outstanding litigation regarding small refinery exemptions, which has the potential.

Andrew: The investment funds were down approximately one 6% for the quarter.

Andrew: Biggest decliner was our investment in Caesars and the largest gainer, where our refinery hedges.

Speaker Change: <unk> to remove over $300 million or more of liabilities.

Andrew: We ended the quarter with $1 $4 billion of cash and cash equivalents at the holding company and an additional $915 million of cash at the funds. So as Carl likes to say, we have a significant war chest to take advantage of opportunities as they arise.

Speaker Change: As a reminder, during the last Trump administration.

Speaker Change: Would receive small refinery exemptions.

Speaker Change: Our real estate segment increased $292 million in the quarter. The increase was due to a combination of a sale of certain properties, which led us to fair value of the remaining assets of <unk>.

Andrew: Lastly, the board has maintained the quarterly distribution at 50.

Speaker Change: <unk> from how we have valued these assets in prior periods.

Andrew: <unk> Depositary unit.

Andrew: Now turning to our investment segment.

Speaker Change: The GAAP equity attributable to IEP in real estate held steady.

Andrew: In terms of our top five disclose names, we see considerable value creation potential at <unk>, we see a gas utility that is closing its ROE gap to peers and separating a utility services business with significant growth opportunity.

Speaker Change: The investment funds were down approximately one 6% for the quarter.

Speaker Change: Biggest decliner was our investment in Caesars and the largest gainer, where our refinery hedges.

Speaker Change: We ended the quarter with $1 4 billion of cash and cash equivalents at the holding company and an additional $915 million of cash at the funds. So as Carl likes to say, we have a significant war chest to take advantage of opportunities as they arise.

Andrew: We see upside in both the gas utility and the services business.

Andrew: At AEP, we see new management closing its ROE gap, improving regulatory outcomes and benefiting from tremendous growth in electricity demand due to AI driven data center demand.

Lastly, the board has maintained the quarterly distribution at <unk> 50 per Depositary unit.

Andrew: AEP recently announced the sale of a 20% stake in a portion of its transmission business, which helped to improve the balance sheet and was equivalent to issuing shares at a 70% premium to the then share price.

Speaker Change: Now turning to our investment segment.

Speaker Change: In terms of our top five disclose names, we see considerable value creation potential at <unk>, we see a gas utility that is closing its ROE gap to peers and separating a utility services business with significant growth opportunity.

Andrew: At Caesars Karl has significant respect for Tom Reeg and what he has accomplished we believe we are buying a great business with tremendous real estate value a great management team that is actively buying back shares and with a growing digital business all of the free cash flow yield of greater than 15%.

Speaker Change: We see upside in both the gas utility and the services business.

Speaker Change: At AEP, we see new management closing its ROE gap, improving regulatory outcomes and benefiting from tremendous growth in electricity demand due to AI driven data center demand.

Andrew: Yeah.

Andrew: <unk> is a high quality ingredients company, they should see improving organic revenue growth and increasing margins from new management ISF trades at a significant discount to its peers on EV to EBITDA.

Speaker Change: AEP recently announced the sale of a 20% stake in a portion of its transmission business, which helped to improve the balance sheet and was equivalent to issuing shares at a 70% premium to the then share price.

Andrew: Bausch, we see considerable value, both with BHP and <unk>.

Andrew: The funds ended the quarter approximately 22% net long adjusting for our refining hedges the fund was 35% and that long.

Speaker Change: At Caesars Karl has significant respect for Tom Reeg and what he has accomplished we believe we are buying a great business with tremendous real estate value a great management team that is actively buying back shares and with a growing digital business all of the free cash flow yield of greater than 15%.

Andrew: And now I will pass it on to Ted to cover our control businesses.

Ted: Thank you Andrew I will start at our energy segment.

Ted: Energy segment EBITDA was 99 million for Q4, 24 compared to $204 million in Q4 23.

Speaker Change: <unk> is a high quality ingredients company that should see improving organic revenue growth and increasing margins from new management ISF trades at a significant discount to its peers on EV to EBITDA.

Ted: This decrease was driven by reduced throughput and lower crack spreads Q.

Ted: Q4, 'twenty for refining margin per throughput barrel was $8 37, compared to $15 and one set in the prior year quarter. The main drivers for the decrease is due to lower crack spreads and unfavorable market derivatives and inventory evaluations.

Speaker Change: We see considerable value, both with BHP and <unk>.

Speaker Change: The funds ended the quarter approximately 22% net loan adjusting for our refining hedges the fund was 35% in that loan.

Ted: Q4, 'twenty for renewable margin per vegetable oil throughput gallon was 79 cents compared to a loss of <unk> 90 in the prior year quarter. The drivers for the increase were lower cost of sales and an increase in the hobo spread.

Speaker Change: And now I will pass it on to Ted to cover our control businesses.

Ted: Thank you Andrew I will start at our energy segment.

Ted: Energy segment EBITDA was 99 million for Q4, 24 compared to $204 million in Q4 23.

Ted: Q4, 'twenty four average realized gate prices for <unk> declined by 5% to $229 per ton and ammonia increased by 3% to $475 per ton when compared to the prior year quarter.

Ted: This decrease was driven by reduced throughput and lower crack spreads Q.

Ted: Q4, 'twenty for refining margin per throughput barrel was $8 37 compared to $15 in <unk> in the prior year quarter. The main drivers for the decrease is due to lower crack spreads and unfavorable market derivatives and inventory valuations.

Ted: Now turning to our automotive segment.

Our automotive business continues to lag compared to prior year results due to the self inflicted wounds as we discussed previously we have recently announced the permanent CEO, who has implemented new initiatives and strategies to remediate. The short term challenges we are currently experiencing.

Ted: Q4, 'twenty for renewable margin per vegetable oil throughput gallon was <unk> 79, compared to a loss of <unk> 90 in the prior year quarter. The drivers for the increase were lower cost of sales and an increase in the hobo spread.

Ted: Management's plan anticipates these challenges will be resolved and their results to be normalized by the second half of 2025.

Ted: Q4, 'twenty four average realized gate prices for UAS declined by 5% to $229 per ton and ammonia increased by 3% to $475 per ton when compared to the prior year quarter.

Ted: During the quarter, a significant tenant in our automotive real estate portfolio made a strategic decision to exit certain locations. We received an early termination payment of $42 million and we have begun marketing these locations to prospective tenants and expect to fill them within the next 24 months.

Ted: Now turning to our automotive segment.

Ted: Our automotive business continues to lag compared to prior year results due to the self inflicted wounds. We discussed previously we have recently announced the permanent CEO, who has implemented new initiatives and strategies to remediate. The short term challenges we are currently experiencing.

Ted: We have substantially completed the exit of our aftermarket parts business, which will be completed by the end of Q1 'twenty five.

Ted: Now turning to our other segments.

Ted: Real estate Q4, 24, adjusted EBITDA decreased by $5 million compared to the prior year quarter, driven by reduced sales of single family homes.

Ted: Management's plan anticipates these challenges will be resolved and their results to be normalized by the second half of 2025.

Ted: Food packaging is adjusted EBITDA, which are both the IEP decreased by $6 million for Q4, 24 as compared to the prior year quarter.

Ted: During the quarter, a significant tenant in our automotive real estate portfolio made a strategic decision to exit certain locations. We received an early termination payment of $42 million and we have begun marketing these locations to prospective tenants and expect to fill them within the next 24 months.

Ted: Volumes have increased however, a shift in product mix and lower pricing led to a reduction in net sales.

Ted: As previously mentioned there are opportunities to improve efficiency at the plants. However, we do not expect a meaningful impact until we execute our capital plan to modernize equipment and reduce the overall cost structure.

Ted: We have substantially completed the exit of our aftermarket parts business, which will be completed by the end of Q1 dollars 25.

Ted: Now turning to our other segments.

Ted: Home fashions, adjusted EBITDA increased by $2 million as compared to the prior year quarter, mainly driven by lower material costs and improved manufacturing efficiencies.

Ted: Real estate Q4, 24, adjusted EBITDA decreased by $5 million compared to the prior year quarter, driven by reduced sales of single family homes.

Ted: Pharma segment's adjusted EBITDA for Q4, 24 improved by $1 million as compared to the prior year quarter, mainly due to higher prescription growth.

Ted: Food packaging adjusted EBIT to both the IAP decreased by $6 million for Q4 dollars 24 as compared to the prior year quarter.

Ted: Recently, one of our developmental therapies cleared a significant FDA milestone and we have begun preparing for clinical trials.

Ted: Volumes have increased however, a shift in product mix and lower pricing led to a reduction in net sales.

Ted: As previously mentioned there are opportunities to improve efficiency at the plants. However, we do not expect a meaningful impact until we execute our capital plan to modernize equipment and reduce the overall cost structure.

Ted: Now turning to our liquidity.

Ted: We maintain liquidity at the holding company and at each of our operating subsidiaries to take advantage of attractive opportunities.

Ted: As of quarter end, the holding company had cash and investment in the funds of $4 1 billion and our subsidiaries had cash and revolver availability of $1 5 billion.

Ted: Home fashions, adjusted EBITDA increased by $2 million as compared to the prior year quarter, mainly driven by lower material costs and improved manufacturing efficiencies.

Ted: 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.

Ted: Pharma segment's adjusted EBITDA for Q4, 24 improved by $1 million as compared to the prior year quarter, mainly due to higher prescription growth.

Ted: Recently, one of our developmental therapies cleared a significant FDA milestone and we have begun preparing for clinical trials.

Ted: Thank you operator can you. Please open up the call for questions. Thank.

Ted: Thank you so much and as a reminder to our talent audience to ask a question simply press star one one on your telephone than wait for your name to be announced to improve yourself press star one again.

Ted: Now turning to our liquidity.

Ted: We maintain liquidity at the holding company and at each of our operating subsidiaries to take advantage of attractive opportunities.

Ted: As of quarter end, the holding company had cash and investment in the funds of $4 1 billion and our subsidiaries had cash and revolver availability of $1 5 billion.

Ted: Please standby, while we compile the Q&A roster.

Ted: 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.

Ted: Again that is star one one to get into Q1 moment for our first question.

Speaker Change: He comes from the line of Andrew Berg with post Advisory Group. Please proceed.

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

Speaker Change: Thank you so much and as a reminder, two artillery audience to ask a question simply press star one one on your telephone.

Speaker Change: Thank you, yes, just a couple of questions with respect to the hedge funds.

Speaker Change: Yes.

Speaker Change: Ended with a net notional long a 22% and I think you said it was 35% ex the energy hedges can you remind me where you were at the end of the third quarter because I think.

Speaker Change: For your name to be announced to remove yourself press star one again please.

Speaker Change: Please standby, while we compile the Q&A roster.

Speaker Change: Overall, the fund was net short.

Speaker Change: 2% I don't recall, what the figure was.

Speaker Change: The energy hedges and are you able to provide any commentary as to what point in the quarter, you had slipped that position for being.

Speaker Change: Again that is star one one to get into Q1 moment for our first question.

Speaker Change: He comes from the line of Andrew Berg with post Advisory Group. Please proceed.

Speaker Change: Slightly negative too obviously.

Speaker Change: Much greater percentage long now.

Speaker Change: Yes.

Speaker Change: Thank you, yes, just a couple of questions with respect to the hedge fund you guys.

Speaker Change: Hey, Andrew Good morning, So if you looked at the hedge fund when you think about some of the hedges that are in there a lot of them are due to the refining hedges and if you looked at crack spreads and I guess just in general how the refining hedges traded when we see crack spreads come down that's our that's our time to take off some of those hedges.

Speaker Change: Ended with a net notional long and 22% and I think you said it was 35% ex the energy hedges can you remind me where you were at the end of the third quarter because I think.

Speaker Change: Overall, the fund was net short.

Speaker Change: And as.

Speaker Change: 2% I don't recall, what the figure was ex the energy hedges and are you able to provide any commentary as to what point in the quarter, you had slipped that position for being.

Speaker Change: Crack spreads go up for other refineries go up that's when we put them back on.

Speaker Change: So it just being opportunistic.

Speaker Change: Okay. So at the end of the third quarter can you I don't know if you have them in front of me here, we need to follow up afterwards, where you were with that that 2% short was what we take the hedges out where you were.

Speaker Change: Slightly negative too obviously.

Speaker Change: Much greater percentage long now.

Speaker Change: Yes.

Speaker Change: Hey, Andrew Good morning, So if you looked at the hedge fund when you think about some of the hedges that are in there a lot of them are due to the refining hedges and if you've looked at crack spreads.

Speaker Change: Yes, we can follow up right. After the call. Good luck, okay, great and then with respect to the real estate segment, you had a pretty significant adjustment to the indicative net asset value for that for that segment can you kind of walk us through.

Speaker Change: I guess just in general how the refining hedges traded when we see crack spreads come down that's our that's our time to take off some of those hedges and as.

Speaker Change: What what was causing that that jump I know in the footnote it talks about I guess some valuation.

Speaker Change: Crack spreads go up if other refineries go up that's when we put them back on.

Speaker Change: So it just being opportunistic.

Speaker Change: Third party valuation work, but can you kind of give us a little bit better understanding.

Speaker Change: Okay. So at the end of the third quarter. If you don't know if you have them in front of me we need to follow up afterwards, where you were with that that 2% short was what we take the hedges out where you were.

Speaker Change: Where where that was and how that came about and what were the underlying drivers for such a significant English.

Andrew Berg: Yeah, Hey, Andrew.

Andrew Berg: So prior to December 31st we felt that GAAP book value was a good proxy for indicative asset value for this segment and what changed in the fourth quarter as we signed an agreement to sell certain properties that far exceeded the book value. So due to this event, we felt that the GAAP book value no longer.

Speaker Change: Yes, we can follow up right after the call if you'd like okay, great and then with respect to the real estate segment, you had a pretty significant adjustment to the indicative net asset value for that for that segment can you kind of walk us through.

Speaker Change: What what was causing that that jump I know in the footnote it talks about I guess some valuation.

Andrew Berg: Represents the indicative fair value. So as a result, we mark these properties to the anticipated sales price and to be consistent for the remaining assets. Within this segment, we just obtained appraisals and mark those properties. Accordingly, So that's what you would see the big jump of.

Speaker Change: Third party valuation work, but can you kind of give us a little bit better understanding.

Speaker Change: Where where that was and how that came about and what were the underlying drivers for such a significant English.

Ted: Yes, Andrew it's Ted.

The driver is really like 290, but you will see the actual absolute value of about 300 quarter over quarter.

Speaker Change: Prior.

Speaker Change: So prior to December 31st we felt that GAAP book value was a good proxy for indicative asset value for this segment and what changed in the fourth quarter as we signed an agreement to sell certain properties that far exceeded the book value. So due to this event, we felt that the GAAP book value no longer represents steam taken.

Andrew Berg: Yes.

Andrew Berg: What was the composition of those properties.

Andrew Berg: You mean the.

Andrew Berg: The fair value jumped.

Andrew Berg: The ones, we have the sale agreement in place I would say its about approximately a $200 million increase due to those properties and the rest of the portfolio just broad shelf is about $90 million.

Speaker Change: At fair value. So as a result, we marked these properties to the anticipated sales price and to be consistent for the remaining assets. Within this segment, we just obtained appraisals and mark those properties. Accordingly, So that's what you would see the big jump of the.

Andrew Berg: With summit.

Andrew Berg: Some going down.

Andrew Berg: Yes.

Andrew Berg: Was this primarily.

Speaker Change: All land or was it retail office industrial I'm, just trying to get a better sense single family home of what was the underlying.

Speaker Change: The driver is really like 290, but youll see the actual absolute values about 300 quarter over quarter.

Speaker Change: Yes.

Andrew Berg: Assets that were so much higher than where you had a marked.

Speaker Change: What.

Speaker Change: What was the composition of those properties.

Andrew Berg: I think we mentioned on the last call that there was some properties that we were looking at and I think it's at the press.

Speaker Change: You mean, the fair value jumped so.

Speaker Change: The ones, we have the sale agreement in place I would say its about approximately a $200 million increased due to those properties and the rest of the portfolio just broad strokes is about $90 million.

Speaker Change: Say that again I'm sorry.

Speaker Change: Yes, we mentioned that on our last call.

Speaker Change: We're exploring a sale of certain properties. So I think if you referenced those comments you'd see where they are.

Speaker Change: With some of it.

Speaker Change: Some going down.

Speaker Change: Yes.

Speaker Change: Okay I'll go back and look I don't recall, what kind of what type of properties elsewhere.

Speaker Change: Was this primarily.

Speaker Change: All land or was it retail office industrial I'm, just trying to get a better sense single family home of what was the underlying.

Speaker Change: Thank you.

Speaker Change: Okay. Thank you again, ladies and gentlemen, if you do have a question press star one one to get in the queue.

Speaker Change: Assets that were so much higher than where you had a marked.

Speaker Change: I think we mentioned on the last call that there was some properties that we were looking at and I think it's at the press.

Andrew Berg: Alright, I see no further questions in the queue I will turn it back to Andrew for final remarks.

Speaker Change: Say that again I'm sorry.

Andrew Berg: Thank you.

Andrew Berg: So I'd like to leave with a reminder, that here at Icahn enterprises, we are intensely focused on our activism strategy.

Speaker Change: Yes, we mentioned it on our last call.

Speaker Change: We're exploring the sale of certain properties. So I think if you referenced those comments you'd see where they are.

Andrew Berg: Have unique advantages, including the icon brand name and a long history and willingness to wage proxy contests.

Speaker Change: Okay I'll go back and look I don't recall, what kind of what type of properties elsewhere.

Andrew Berg: It is this track record, which frequently allows us to be invited to join boards and work cooperatively cooperatively with our fellow directors to make the key changes that will drive shareholder value.

Speaker Change: Thank you.

Speaker Change: Okay. Thank you again, ladies and gentlemen, if you do have a question press star one one to get in the queue.

Andrew Berg: Furthermore, given our balance sheet liquidity and permanent capital structure, we have the ability to tender for entire businesses.

Speaker Change: Alright, I see no further questions in the queue I will turn it back to Andrew for final remarks.

Speaker Change: Most simply do not possess.

Speaker Change: Our returns can be lumpy and dissatisfied at times as we continue to focus on our activist efforts at both our investment segment and control businesses. We believe they will bear fruit for all unit holders will speak soon.

Thank you.

Speaker Change: So I'd like to leave with a reminder, that here at Icahn enterprises, we are intensely focused on our activism strategy.

Speaker Change: Have unique advantages, including the icon brand name and a long history and willingness to wage proxy contests.

Speaker Change: Thank you and with that we thank you all for participating and you may now disconnect.

Speaker Change: It is this track record, which frequently allows us to be invited to join boards and work cooperatively cooperatively with our fellow directors to make the key changes that will drive shareholder value.

Speaker Change: Furthermore, given our balance sheet liquidity and permanent capital structure, we have the ability to tender for entire businesses.

Speaker Change: Most simply do not possess.

Speaker Change: Though our returns can be lumpy and dissatisfied at times as we continue to focus on our activist efforts at both our investment segment and control businesses. We believe they will bear fruit for all unit holders will speak soon.

Speaker Change: Hi.

Speaker Change: Thank you and with that we thank you all for participating and you may now disconnect.

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