Q2 2025 Icahn Enterprises LP Earnings Call

Looking statements should circumstances change, except as otherwise required by law.

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

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.

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.

All net income and Ava amounts we will discuss are attributable to Icahn Enterprises, unless otherwise specified.

I'll now turn it over to Andrew Teno, our Chief Executive Officer.

Thank you, Rob, and good morning, everyone.

NAV increased $252 million from the first quarter, driven primarily by positive performance in CVI, offset by decreases in this case and out of service.

CVI's share price increased by 38%, which, when combined with additional share purchases of 32 million, led to an increase of $561 million from the first quarter.

Crack spreads have improved, especially diesel cracks, and we have no more planned turnarounds in 2025 and 2026.

This enhanced cash flow profile has led to CVI recently paying down $90 million of its previously issued Term 1.

Regarding RNs, we remain hopeful that the new administration may lead to the resolution of our outstanding litigation regarding small refinery exemptions.

Which has the potential to remove the $548 million liability that was recorded as of the second quarter of 2025 and potentially provide clarity to future years.

We also announced that CVI's CEO, Dave Lamp, would be retiring. As of year-end, his replacement, Mark Posh, is an internal promotion who has been the CEO of the fertilizer business and has also led CVI's midstream efforts for the past few years.

The investment funds ended down approximately 0.5% for the quarter, primarily driven by gains in our consumer cyclical sector, offset by our broad market and refining. Hedges.

Excluding the refining, hedge fund performance would have been a positive return of 2%.

Our Auto Service division remains a turnaround story.

We are encouraged by the change in top-line revenue.

After seeing first quarter auto service revenue down 5% year-over-year, we saw revenue improve to 1% growth in both May and June, and it will accelerate further in July.

In our Pharma segment, we have approved the initiation of Viva's pivotal trial for the pulmonary arterial hypertension or PAH asset V0106.

In short, this drug is meant to serve patients with advanced pulmonary artery wedge pressure, who struggle to breathe, provide oxygen to the blood, and maintain mobility and quality of life, given a restriction of blood flow in their arteries, leaving the heart to the lungs.

Currently, there are multiple alternative treatments in the market. The latest treatment is marketed under the name Winre.

With any current pH treatment, the patient may still require a lung transplant and/or heart transplant, which will not address the underlying cause of pH.

We believe our asset is unique, and the FDA will evaluate the potential of this drug to be disease-modifying.

The trial will enroll 300 patients and includes unique analyses and clinical endpoints.

As the trial progresses, we will provide updates, with the first one expected in approximately 12 to 18 months from now.

We ended the quarter with $1.1 billion of cash and cash equivalents at the holding company and an additional $700 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.

Lastly, the board has maintained the quarterly distribution at $0.50 per depository unit.

Now, turning to our investment segment.

Despite the market volatility, we see considerable value creation potential in our portfolio.

At AAP, we see New Management closing, its ROE gap improving, regulatory outcomes solidifying, its balance sheet benefiting from tremendous electricity load growth due to AI-driven data center demand.

We think electric utilities, particularly AEP, which has operations in real data center hotspots of Texas, Indiana, and Ohio, are an excellent way to benefit in the picks and shovels of AI.

At Swix, we see a gas utility that is closing. Its ROE gap to peers.

Seeing a push towards more favorable rate making in both Nevada and Arizona.

During the second quarter, Swix was also able to execute on two sell-downs of Century, its Utility Services Division.

Getting the company's closer to a full separation.

We believe that Century should also see an attractive multi-year growth opportunity, given continued investment in the electrical and gas grids needed to drive all of the infrastructure investment from data centers, electrification, and reassuring.

At Caesars, we have an excellent management team with tremendous owned real estate value and a growing digital business that is deploying its greater than 15% free cash flow yield to repurchase shares and repay debt.

We think the digital business is really underappreciated. In fact, in the second quarter, the digital business grew revenue by 24% and EBITDA by 100%.

In time, we would expect Caesar's digital business to be unlocked from its current structure. The Caesar share price does not reflect the tremendous value of the business.

The funds ended the quarter approximately 2% higher.

Adjusting for our refining hedges, the fund was 23% long.

And now I will pass it on to Ted to cover our controlled businesses.

Thank you, Andrew.

I will start with our energy segment. Segment consolidated EBITDA was negative $24 million for Q2 2025 compared to $103 million in Q2 2024.

CVR is refining. Business was negatively impacted by the unfavorable mark-to-market, Rens valuation, and reduced throughput volumes in connection with the turnaround that was completed earlier in the year.

This was all set in part by positive performance in the fertilizer business due to continued high prices and strong utilization.

And now turning to our Auto segment.

Q2 2025 Automotive Service revenues decreased by $8 million compared to the prior year quarter.

Same-store revenues were relatively flat compared to the prior year. Quarter for reference, a quarter ago, the same comparison was down 5%.

The positive trajectory is attributed to our continued investment in labor, inventory, equipment, facilities, and marketing.

While the top line is improving, we are seeing higher labor costs and operating expenses associated with our continued investment.

We anticipate these initiatives will improve long-term profitability.

To give a couple of examples, our shop labor is improving, the average ticket price is increasing by adding more work order attachments, and we are renovating our facilities at our top-performing stores to enhance customer experience and drive car count.

During the quarter, we closed 22 underperforming locations, bringing the total to 44 for the first half of 2025.

To offset store closures, we continue to add to our Greenfield pipeline in attractive markets and plan on adding 16 locations by the end of the year.

Now, turning to our other operating segments.

Real estate's Q2 2025 adjusted EBITDA decreased by $2 million compared to the prior year quarter.

During the quarter, we sold one of our country clubs.

This investment has been highly successful over the years as we are able to execute our strategy to build profitable luxury homes and operate an exclusive club, which in turn increases the value of both the club and the surrounding development.

After years of investing in the club and selling through nearly all of our inventory, we have successfully achieved our strategy and monetized the club.

We intend to redeploy this capital to mirror these results in our recently acquired club in Pinehurst, and we continue to seek new opportunities.

Food packaging is adjusted. I decreased by $9 million for Q2 2025 as compared to the prior year quarter.

The decrease is primarily due to lower volume, higher manufacturing inefficiencies, and interim disruptive headwinds from the restructuring plan we announced last quarter. We anticipate continued operational inefficiencies during the implementation phase, which we expect to be substantially complete by the end of 2025.

Both Home Fashion and Farmers adjusted IRA were flat when compared to the prior year quarter.

And now, turning to our liquidity.

We maintain liquidity at the holding company and at each of our operating subsidiaries to take advantage of attractive opportunities. As of quarter-end, the holding company had cash and investments in the funds of $3.5 billion, and our subsidiaries had cash and revolver availability of $1.1 billion.

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.

Please open up the call for questions.

Thank you. As a reminder, to ask questions, simply press star 11 on your telephone and wait for your name to be announced. To remove yourself, press star 11 again.

1 moment, please, for our first question.

It comes from Andrew Berg with Post Advisory Group. Please proceed.

Hey, uh, just a quick question with respect to the decrease in the cash balance. Uh, was most of that, um, I'm referring to cash at the holding company level, the $1.86 billion; was most of that attributable to, uh, the increase in the...

Uh, CVR shares. Or can you just stop and reconcile with the change from last quarter?

Yeah. The the big drivers of the decrease is we have our interest payments, uh, 4 of the 6 tranches paid in the quarter and we also had 2 of the uh, the lp distributions pay because in q1, you don't have 1 but it hits in Q2.

Those are the those are 2 big drivers uh and to an extent, the CVR repurchase, but that was, you know, about 32 million and a quarter. Okay perfect. Thank you.

Thank you. And I'm not showing any further questions in the queue. I will turn it back to management for any final comments.

All right. Well, thanks everyone for joining. We'll talk to you next quarter.

Thank you, ladies and gentlemen, for participating. In today's conference, you may now disconnect.