Icahn Enterprises (IEP) 5 Nov 192019 Q3 Earnings call transcript

Good morning, and welcome to the Icahn Enterprises L.P. Q3 2019 Earnings Call with Jesse Lynn, General Counsel; Keith Cozza, President and CEO; and SungHwan Cho, Chief Financial Officer.

I would now like to hand over the call to Jesse Lynn, who will read the opening statements.

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. risks the that including Securities legal other involve our discussed economic, statements and with filings and factors. forward-looking and are uncertainties in competitive, These Exchange Commission, realized. that expectations assurance no is there will Accordingly, be our

can statements GAAP We assume no includes found law. presentation. change, measures to be such update certain by the financial non-GAAP as required directly presentation A to should reconciliation non-GAAP back any otherwise of the or except This of circumstances revise obligation measures forward-looking comparable also financial most in measures. financial this

Chief it Officer. I’ll to now turn over Keith Cozza, our Executive

Thanks, Jesse. call. quarter and to conference XXXX the Good third morning, everyone, earnings Icahn Enterprises welcome

on me Chief call our Cho, Financial Joining Officer. is today’s SungHwan

review of financial the by business of and begin segments. our our some performance will Sung providing in-depth will highlights. results I an brief then provide

address then will available We be questions. your to

our Resources, Investment QX the loss closed of $X $XXX in of Funds, Adjusted QX gain Enterprises or XXXX. quarter. which Icahn loss in For to of attributable per unit, QX primarily million, EBITDA compared attributable to or losses quarterly driven to in loss during to period. XXXX Icahn sale of was by was The a Enterprises gain from for the the offset million, a per a compared we income Ferrous $X.XX had $XX of million, the prior part LP $X.XX by XXXX, net year LP million unit net of $XXX for

QX compared of for period. X.X% Our year Investment negative return negative Funds to the a X.X% a of XXXX, had return prior in

Investment continued of net quarter index positions finishing positioned, losses net driven to equity equity be performance XX%. with and positions. short in defensively long negative Our was exposure our by QX certain short Funds core The the in

and increased quarter, pricing. billion rates, volumes adjusted and a high throughput third and In net volumes, our was were CVR million. had segment, XXXX EBITDA strong fertilizer by consolidated Energy improved led $XXX our $X.X sales sales QX Energy capture

as of Last week, share quarterly $XXX authorization the million $X.XX dividend CVR increase as stock program. per $X.XX in its from a announced an per well to share, repurchase

service and increase in $XXX and automotive revenues, revenues forward due multi-year a The $XXX million, prior period. was sales continues by Net offset our XXXX in Group Automotive higher improve Icahn million push primarily sales. in QX the to in compared year profitability. service decrease to plan aftermarket transformational part were for the the with to operations to Automotive segment restructure parts

X.XX%. senior million issued IEP new QX, XXXX, $XXX due During coupon in a notes of of had

cash down in notes also due at IEP $X.X now debt stands billion. company XXXX billion senior QX We Total paid outstanding in the $X.X of with on at hand. holding

for announced we wholly-owned QX, our a a Ferrous equity interest million merge proceeds to $XXX in of of In our received approximately with closed $XXX gain IEP Ferrous future debt of subsidiary and subject Resources Vale. realizing to agreement adjustments, on million. previously Resources closing approximately

to We of closed across with opportunities and balance undervalued investment sheet segments. strong the search continue all our a for business quarter

Sung. me over turn With that, to let it

and then net Icahn year results the the prior net operating Enterprises QX Thanks, loss million on and Keith. segments period. highlight million, balance XXXX, comment In to compared our consolidated was of the briefly of reviewing of by I $XX performance begin sheet. our in to $XXX attributable will our strength income

XXXX. was quarter. QX a the see the million earlier. attributable that Keith for Resources driver the of Ferrous XXXX, our gain Investment net in $X As gain million, of to $XXX for significant of loss Icahn you mentioned sale was QX the Adjusted partially was XXXX can in Enterprises a to QX on Funds EBITDA a performance compared of of on recorded our offset Slide X, This by loss

the performance regarding I detail now provide will our more of segments.

Icahn to compared of for attributable The had Enterprises a XXXX. X.X% to Our QX Funds negative QX million negative a loss for $XXX in of Investment XXXX, return XXXX. QX Investment X.X% had segment a

Long positions attribution positions the XXX%, X.X%. November performance for other had negative a of gross a short annualized. and Investment X.X% return end while attribution in performance of XXXX, negative had Since expenses inception quarter, of approximately XXXX Funds the the X.X% current through or QX is the

XXXX. The of of compared in funds short the Investment IEP’s net as the was $X.X XX% significantly of was hedged. billion end at net of XXXX, exposure September XX%, Funds the continue exposure XXXX. a At to be to QX end short QX XX, investment

And now to our segment. Energy

consolidated the reported prior and was adjusted net $X.X EBITDA while year sales For were of million. segment down QX flat. $XXX sales adjusted period, our of billion Net XXXX, Energy from XX% EBITDA

performance. CVR Refining and in CVR a improved crude crack third year, quarter tighter quarterly third results Despite strong the quarter differentials through rates generated higher volumes. and solid spreads had throughput capture this

XXXX throughput barrel was reported adjusted year the $XX.XX in day Refining throughput for QX XXXX, barrels QX period. of prior period. to was Combined was total in for above EBITDA period. total the slightly Refining to quarter, XXX,XXX approximately year compared barrel the CVR compared year per the in prior which $XXX margin $XXX prior per million, million $XX.XX

full QX Partners East for completed its to coming now in CVR turnaround of production. October, QX reported adjusted $XX million is XXXX EBITDA turnaround Dubuque expenses, to adjusted for planned compared XXXX. up $XX back million and successfully

represents program CVR by announced dividend yield X%. recently increased repurchase approximately $X.XX which $XXX share, cash of to million X% a stock quarterly an and its annualized per dividend Energy

attributable service The net revenues revenues, service part were due year in to Automotive sales. Higher Automotive do-it-for-me increase segment. the by and fleet aftermarket QX service and XXXX growing was Icahn Group Now to up offset a for decrease automotive partially million, revenues higher were prior $XXX our from to businesses. sales period. X%

in in parts gain margin for to and year businesses, was loss XXXX, million impacted Adjusted rate EBITDA $X to adjustments. compared other the margin to contraction reduction for and support unfavorable services Profitability million vendor was prior IEP attributable a QX due funds the segment a of of the $XX period. Automotive by in

Icahn previously is a disclosed, from business. its separate implementing aftermarkets plan business to parts Automotive the service As

profitability to our and our a improve We to to transformation business. multi-year business in in have started service growing invest execute parts plan on continue

our to offset flat QX unfavorable and segment. the year Net was sales with Favorable turning XXXX product prior mix Food sales exchange price and were Now foreign period. by Packaging for volumes. lower

for percentage Consolidated million adjusted XXXX, $XX EBITDA period. was XXXX, $XX which prior the $X net was in in QX to margin year was year XX% the sales as of Gross in million million compared period. prior QX down a

million, decreased The Now average volumes to our Metal decrease due $XX by or compared to the to lower lower sales segment. for for all QX was year product XXXX period. pricing and XX% sales net Net prior lines.

was continued the impacted which $X million be volumes to China. shipment below million prior year the by with for is trade dispute period. XXXX, QX Non-ferrous $X Adjusted significantly EBITDA ongoing

in $X revenues XXXX And rental now $XX income which Estate XXXX prior for both and Real substantially from million derived below Estate QX to operations XXXX, from was operating were were year estate QX QX operations. our the period. and Revenue million Real from segment. our real club

former sold to to XXXX income The Las generated related in of several the from income The a QX Real repayment the XXXX. decline segment sale $X of of property Fontainebleau that adjusted Vegas. due loss to and to the of in loan were due properties million is of EBITDA loss the related the Estate

Fashion our our XXXX. Fashion the year sales Home volume to Now XX% compared were segment attributable Home period, to QX up prior segment. XXXX acquisition higher for to the QX net due VSS to sales turning in

U.S. hospitality institutional strengthens the As focus acquisition VSS international and to market addressable the of WestPoint’s previously the businesses outside in extend its disclosed, and markets

adjusted EBITDA net was the sales percentage $X compared EBITDA as period. to XX% XXXX, was for quarter, of a the margin year as Gross QX million million XX% for for of loss for to loss Adjustable – XXXX. compared of a a $X QX prior

holding Now liquidity We I advantage opportunities. in our and revolver with operating each liquidity ample cash, Investment We our QX take discuss of availability $X.X investment the subs the position. equivalents, Funds approximately maintain billion. to attractive at XXXX company and of will cash totaling our ended at

and million cash undrawn have attractive Our million to of credit of advantage subsidiaries facilities $XXX take opportunities. enable to $XXX approximately them of

building opportunities to enable you. liquidity In Thank operating asset of existing our summary, value to segments. continue and on outside us to focus and on we capitalize within maintaining ample

please Operator, for the you open call questions? can

Instructions] And question comes Thank our you. first Dan [Operator from Fannon Jefferies. from

Your line is open.

filling Dan. morning. for actually in Good this Hey, James Steele is

James. Hey,

Hey, James.

So my is on fund question your outlook of less getting got just less on is or the that throughout kind quarter. valuation the hedge short, net short net nothing

valuation what wondering there? house of approaching on just the So and how things is view you’re kind

trade negotiations adjustment the made. we August, previous exposures had net whether sort this would basically view of progress on sure. to of described at specific Yes, September, quarter-end I quarter-end of beginning regarding [ph] end as the debt that the of had be and from

tactical the that to rarely. of at as negotiations. do a in a that trading was I – opportunity, which related of been view a it But even higher have shorts would so more month it described sort of say And those It I sort levels. describe would while, of reestablished we was once China some I as a September short-term trade for

Understood. And then just…

Yes, valuation, sure. for

– question seeing, reward I of create for themes model consistent. within good risk can look, certain where it’s been pockets, fund act favorable that mean, There I are part the certain second we’re valuations. mean, your your the we’ve So of profile. investment this pretty a

then this in sort that the or very But cycle still a picking speaking, that we’re lower, here goes long spots broadly But opportunities would finding, market saying. of finding less XX% without it’s But been we’re market. yes, in bull be there.

much approach. know, have across theme. approaching approach valuations [ph] a value – XX.X, We’re investing you value – years You’re we, XX as we

And still harder doing but we’re so find to okay. think it’s bit I little names, a

last changed. the heard interest outlook And secondly, guess, sort rates it. from I the Got just for of we guys, since time you

and just debt, debt from paying some more sheet just So Ferrous. more that on you balance issuing have the knowing finished some down cash

be for the the what outlook or what for might Just be more for might acquisitions? – just curious debt, the future given need appetite

Yes.

an really we’ll I think on opportunistic basis. that approach

maturity I I’m pretty, XXXX. is, from XXXX pretty or familiar sure through with you’re our well-balanced So and mean it’s that what stack, by debt current debt ladder,

As we’ll do closer some we to normal to refinancings eventually. XXXX, get obviously, look

cash eight-year do far as perspective, meaning, like as look we even of if mean, view or opportunities. rate while will – can And like some or we that. And compelling intermediate looks from new seven rates, we short the will for be it I don’t we adding we as material really time, periods a it debt, our market investment mind what just add of raw stockpiling for the time, periods debt we incremental effectively.

that at be on money than the to the be there balance opportunities, it’s and go another have when search for another to will be it happens, better there great will market sheet recession, time. rather some there’ll correction, Inevitably, that always

again, it think us I the wouldn’t opportunity maturity. surprising if marketplace the be to debt you we So set, can in see but depend it’ll extend looking back on were

there Mr. near-term? it. some on the And the were throughout the the down business moving Got operations impact Icahn to has headline quarter the just in any on Florida lastly, or that of financials then

so. fairly think think financials of It’s we QX we that. and and plans to It’s out expect like take end or the the rolled number employees certainly moving don’t And a I operations move anything a at don’t I disruption of and been or any May around process. we smooth have place of something will year. next

you. Thank Perfect.

Thanks.

[Operator no questions from you. showing Thank our And phone further lines. Instructions] I’m

good discuss QX speaking to everybody. you New results. forward day. look with to Thanks, We’ll in Okay. a Year Have the

and thank program. conference. gentlemen, today’s for Ladies in conclude you the does This participating

Everyone, You may have a wonderful disconnect. day. all