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Icahn Enterprises LP (IEP) Q1 2024 Earnings Call Transcript Highlights: Key Financial Moves and ...

GuruFocus Research
·4-min read

  • Q1 Net Loss: $38 million, improvement of $232 million over Q1 2023.

  • Adjusted EBITDA: $134 million, up $39 million from Q1 2023.

  • Indicative Net Asset Value: Approximately $5 billion, increase of $194 million from previous quarter.

  • Investment Funds Return: Negative 0.8% for the quarter, adjusted positive 5.8% excluding energy shorts.

  • Energy Segment EBITDA: $118 million for Q1 2024, down from $229 million in Q1 2023.

  • Refining Margin Per Throughput Barrel: $16.29 in Q1 2024, down from $23.24 in Q1 2023.

  • Automotive Segment Net Sales: Decreased by $73 million from Q1 2023.

  • Real Estate Segment Adjusted EBITDA: Decreased by $2 million from Q1 2023.

  • Quarterly Distribution: $1.00 per depositary unit, consistent with last quarter.

  • Liquidity: Holding Company had $4.9 billion in cash and investments; subsidiaries had $1.1 billion in cash and revolver availability.

Release Date: May 08, 2024

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

Positive Points

  • First-quarter net loss improved by $232 million compared to Q1 2023, indicating a significant reduction in losses.

  • Adjusted EBITDA increased by $39 million in Q1 2024 compared to the same period last year, showing improved operational efficiency.

  • Indicative net asset value rose by $194 million from the previous quarter, reflecting an increase in the overall value of the company's assets.

  • The automotive service division is implementing key initiatives aimed at driving earnings and cash flow, including product sourcing and inventory reduction.

  • The Board approved a consistent quarterly distribution of $1.00 per depositary unit, maintaining a steady return to shareholders.

Negative Points

  • The company reported a net loss of $38 million in the first quarter of 2024, indicating ongoing challenges in achieving profitability.

  • The Investment Funds experienced a negative return of 0.8% for the quarter, primarily due to poor performance in the energy sector and broad market shorts.

  • In the Energy segment, EBITDA decreased significantly from $229 million in Q1 2023 to $118 million in Q1 2024, largely due to lower refining margins.

  • Net sales and other revenues in the Automotive segment decreased by $73 million compared to Q1 2023, driven by the deconsolidation of Auto Plus and reduced car count.

  • Real Estate segment's adjusted EBITDA decreased by $2 million compared to the prior year quarter, primarily due to reduced sales of single-family homes.

Q & A Highlights

Q: Can you expand on the strategic options for CVI mentioned in the recent 8-K filing? A: Andrew Teno, President and CEO of Icahn Enterprises, explained that they are long-term investors and dealmakers always looking for opportunities. The mention of strategic options for CVI was appropriate given the recent 8-K filing, indicating a focus on leveraging CVI's strengths in refining operations to explore potential accretive opportunities.

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Q: What is the focus for the auto segment moving forward? A: Andrew Teno highlighted that despite current market demand not being spectacular, there are numerous long-term opportunities for the auto service business. These include improving product sourcing, pricing strategies, and store optimization, which are expected to drive higher gross margins and enhance service levels.

Q: How does the current macroeconomic environment affect your activist investment strategy? A: Andrew Teno noted that opportunities for activism are always present as companies frequently face challenges. The environment has not significantly altered their approach, as they continuously evaluate potential investments, focusing on unlocking value regardless of economic conditions.

Q: Can you discuss the hedging strategy in the investment fund? A: Andrew Teno stated that Icahn Enterprises does not aim to bet on market directions but maintains a cautious approach with appropriate hedging. While minor adjustments might occur, no significant changes in their hedging strategy are anticipated in the near term.

Q: What are the key focuses for Icahn Enterprises moving forward? A: In his closing remarks, Andrew Teno reiterated the firm's commitment to its activism strategy, leveraging its brand, balance sheet, and unique capabilities to drive shareholder value. This includes the potential to tender for entire businesses, setting them apart in the investment landscape.

Q: What financial results did Icahn Enterprises report for Q1 2024? A: The company reported a net loss of $38 million, an improvement from the previous year, with adjusted EBITDA of $134 million. The indicative net asset value was approximately $5 billion, reflecting a solid financial position.

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

This article first appeared on GuruFocus.