• NAV Decrease: $423 million decrease from the second quarter of 2024.
• Investment Fund Returns: Up approximately 8% for the quarter.
• Cash and Cash Equivalents: $1.6 billion at the holding company and $800 million at the funds.
• Quarterly Distribution Reduction: From $1 per depositary unit to $0.50.
• Energy Segment EBITDA: Negative $38 million for Q3 '24 compared to $347 million in Q3 '23.
• Refining Margin per Throughput Barrel: $2.53 in Q3 '24 compared to $31.05 in Q3 '23.
• Automotive Services Revenue Decrease: $51 million decrease due to operational challenges.
• Aftermarket Parts Revenue Decrease: $20 million decrease due to business winding down.
• Real Estate Adjusted EBITDA Decrease: $10 million decrease compared to the prior year quarter.
• Food Packaging Adjusted EBITDA Decrease: $6 million decrease compared to the prior year quarter.
• Pharma Segment Adjusted EBITDA Improvement: $2 million improvement compared to the prior year quarter.
• Liquidity: Holding company cash and investment in funds of $4.3 billion; subsidiaries cash and revolver availability of $1.1 billion.

• Warning! GuruFocus has detected 4 Warning Signs with IEP.

Release Date: November 08, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• The investment funds achieved an 8% increase for the quarter, driven by healthcare investments and refining hedges.
• Icahn Enterprises LP ended the quarter with $1.6 billion in cash and cash equivalents at the holding company and an additional $800 million at the funds, providing significant liquidity.
• The company sees considerable value creation potential in its top five disclosed investments, including SWX, AEP, IFF, Caesars, and Bausch.
• The Pharma segment's adjusted EBITDA improved by $2 million compared to the prior year, driven by higher prescription growth.
• Icahn Enterprises LP is exploring the sale of a 45-acre site in Nashville, which could yield proceeds far exceeding its current book value.

Negative Points

• Net Asset Value (NAV) decreased by $423 million from the second quarter of 2024, impacted by declines in CVR Energy and the auto service segment.
• The Energy segment reported a negative EBITDA of $38 million for Q3 2024, a significant drop from $347 million in Q3 2023, due to unplanned downtime and lower refining margins.
• Automotive Services revenues decreased by $51 million due to operational challenges, including insufficient tire inventory and staffing issues.
• The quarterly distribution to unitholders was reduced from $1 per depositary unit to $0.50, which may disappoint some unitholders.
• Food Packaging adjusted EBITDA decreased by $6 million compared to the prior year, with challenges in product mix and pricing impacting net sales.

Q & A Highlights

Q: How is Icahn Enterprises managing liquidity in relation to dividends and new investments, especially considering the CVR discussion? A: Andrew Teno, President and CEO, explained that Icahn Enterprises has a significant liquidity war chest, with $1.5 billion to $1.6 billion in cash at the holding company and $800 million at the hedge funds. The company is focused on maintaining liquidity to capitalize on investment opportunities, including the CVR tender, which is seen as an attractive investment. They also have undervalued assets, such as land in Nashville, which could provide additional liquidity.

Q: Can you provide more details on the restructuring in the auto business and the expected timeline for improvements? A: Andrew Teno noted that management changes, including a new CEO and CFO, occurred around the end of the quarter. Improvements have already been observed, with revenue trends improving from a 20% year-over-year decline to high single digits. The focus is on executing good ideas with better management to achieve same-store sales growth and margin improvement.

Q: How is the investment fund adjusting its strategy in light of the recent change in the White House? A: Andrew Teno stated that there are not many changes in the hedge book, but the change in administration may allow for more M&A opportunities. The Trump administration is expected to be more favorable towards refining, which could benefit CVR.

Q: What are the plans for capital expenditure in the Food Packaging segment to modernize facilities? A: Ted Papapostolou, CFO, mentioned that management is working on a capital plan to modernize equipment and reduce costs. While it's too early to specify the amount, the plan aims to improve efficiency and profitability. The capital needs are expected to be immaterial at the IEP level.

Q: Can you explain the discrepancy between the investment fund's performance and the value shown on the financial statements? A: Andrew Teno clarified that there was a distribution from the investment funds to the IEP holding company cash during the quarter. This cash was used for various purposes, including bond repurchases in the open market, which is reflected in the financial statements.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.