Yahoo Finance Icahn Enterprises L.P. (NASDAQ:IEP) Q1 2024 Earnings Call Transcript
Icahn Enterprises L.P. (NASDAQ:IEP) Q1 2024 Earnings Call Transcript May 8, 2024
Icahn Enterprises L.P. isn't one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Operator: Good morning, and welcome to the Icahn Enterprises LP's First Quarter 2024 Earnings Conference Call with Andrew Teno, President and Chief Executive Officer; Ted Papapostolou, Chief Financial Officer; and Robert Flint, Chief Accounting Officer. I would now like to hand the call over to Robert Flint who will read the opening statements.
Robert Flint: Thank you, operator. The Private Securities Litigation Reform Act of 1995 provides a Safe Harbor for forward-looking statements that we make in this presentation, including statements regarding our future performance and plans for our businesses and potential acquisitions. Forward-looking statements may be 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 expected future business and financial performance of Icahn Enterprise as LP 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.
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. This presentation also includes certain non-GAAP financial measures including adjusted EBITDA. 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 EBITDA amounts. We will discuss our attributable to Icahn Enterprises unless otherwise specified.
I'll now turn it over to Andrew Teno, our Chief Executive Officer.
Andrew Teno: Thank you Rob. I will provide a brief overview of Q1 results and then we will be available for questions. First quarter net loss was $38 million, an improvement of $232 million over Q1 of 2023. First quarter adjusted EBITDA was $134 million, an increase of $39 million compared to Q1, 2023. Indicative net asset value ended the quarter at approximately $5 billion, up $194 million from the prior quarter. In terms of our controlled businesses, CVI has benefited from lower rent expense offset by wider than usual refined product basis. We believe there are opportunities swirling in the refining space and we'll be disciplined to see if we can find something accretive and attractive. The auto service division is working on several key initiatives to drive earnings and cash flow.
Ones of particular note include product sourcing and inventory reduction. Regarding our automotive owned real estate, we are making solid strides with our transformation plans. We have added key personnel to the team to further optimize the real estate portfolio and the auto service business through leasing, greenfields, store optimizations and out-parcel development. This quarter the investment funds had a negative return of 0.8%, primarily driven by energy sector and broad market shorts. If you were to subtract out the impact of our energy shorts, which offset our refining exposure, our returns would have been a positive 5.8% for the quarter. One particular contributor to performance with Southwest Gas Holdings, which increased in value through increased utility profitability and the impact of the recently completed Century IPO.
We believe that Century and another one of our long positions AP [ph] are beneficiaries of the need for investment in the grid and additional generation to support growing AI related data center demand. Our headline net short exposure of 27% is a net long exposure of 7% when you adjust for the energy hedges. This compares to net short exposure of 6% as of year end excluding the energy hedges. As you can see, we continue our recent trend of getting slightly more net long and focusing on our activist efforts. Additionally, the Board approved a $1 quarterly distribution per depository unit, which is consistent with last quarter. With that, let me turn it over to Ted for a detailed discussion of all of our segments.
Ted Papapostolou: Thank you, Andrew. I will begin by reviewing the performance of our segments and comment on the strength of our balance sheet. Turning to our investments segment. The funds had a negative return of 0.8% for the quarter. Long and other positions had a positive performance attribution of 12.6%, while short positions had a negative performance attribution of 13.4%. The holding company's interest in the funds was approximately $3.2 billion as of quarter end. And now turning to our energy segment. Energy segment's EBITDA was $118 million for Q1 2024 compared to $229 million for Q1 2023. Q1 2024 refining margin per throughput barrel was $16.29 compared to $23.24 in the prior year quarter. This decrease is primarily driven by lower crack spreads offset in part by reduced RFS expenses and favorable rent revaluation.
Q1 2024 average realized gas prices for UAN decreased by 42% to $267 per ton and ammonia decreased by 41% to $528 per ton when compared to the prior year quarter. CVI declared a first quarter cash dividend of $0.50 per share. And now turning to our Automotive segment. Net sales and other revenues decreased by $73 million compared to Q1 '23, primarily driven by the deconsolidation of Auto Plus during the prior year quarter as well as reduced car count for the Automotive service business. Adjusted EBITDA improved $2 million for Q1 2024 compared to Q1 2023. Automotive service was able to maintain adjusted EBITDA through cost cutting and margin initiatives, which offset reduced car count. And turning to our Real Estate segment. Q1 2024 net sales and other revenues decreased by $5 million and adjusted EBITDA decreased by $2 million compared to the prior year quarter, primarily driven by reduced sales of single-family homes.
And turning to our other operating segments. Food Packaging's adjusted EBITDA decreased by $4 million for Q1 2024 as compared to the prior year quarter, driven by lower volumes due to softening demand. Home Fashion's adjusted EBITDA increased by $1 million as compared to the prior year quarter, mainly due to margin improvement offset by lower sales. The Pharma segment's adjusted EBITDA for Q1 2024 improved by $5 million as compared to the prior year quarter, mainly due to higher sales and lower operating expenses. And 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 $4.9 billion and our subsidiaries had cash and revolver availability of $1.1 billion.
In summary, we continue to focus on building asset value and maintaining liquidity and 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?
See also
20 States With the Most Beautiful Flags According to Reddit and
25 Most Underrated Cities in Europe to Visit in 2024.
To continue reading the Q&A session, please click here.
