Release Date: August 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Icahn Enterprises LP (IEP, Financial) maintains a strong liquidity position with $1.5 billion of cash at the holding company and $1.6 billion at the funds.
- The company successfully refinanced its 2025 notes, pushing the next maturity to May 2026.
- Automotive segment EBITDA improved slightly due to cost-cutting efforts despite reduced consumer spending.
- The company continues to make progress in its transformation plan, with 25 signed leases that are expected to contribute to future revenue.
- Pharma segment's adjusted EBITDA improved by $3 million compared to the prior year, driven by higher prescription growth.
Negative Points
- Net Asset Value (NAV) declined by $969 million from the prior quarter, primarily due to underperformance in the Investment segment.
- Energy segment's EBITDA dropped significantly to $46 million in Q2 2024 from $173 million in Q2 2023, mainly due to lower refining margins and a fire at the Wynnewood refinery.
- Automotive segment net sales and other revenues decreased by $42 million compared to the prior year quarter.
- Food Packaging's adjusted EBITDA decreased by $5 million year-over-year, driven by a weaker mix of business and lower margins.
- Real Estate segment's adjusted EBITDA decreased by $1 million compared to the prior year quarter, primarily due to reduced sales of single-family homes.
Q & A Highlights
Highlights from Icahn Enterprises LP (IEP) Q2 2024 Earnings Call
Q: Can you provide additional thoughts on the fund's positioning and recent market volatility?
A: Andrew Teno, President and CEO: The markets are volatile, and we maintain a hedged position while believing in our long-term activist strategy. Our significant holdings, such as Southwest Gas, AEP, Caesars, IFF, and Bausch, have strong fundamentals and catalysts that we believe will outperform over time.
Q: Where do you think you are in the turnaround of the auto business?
A: Andrew Teno, President and CEO: We are in the early stages of the turnaround. EBITDA margins in the service business are currently around 4-4.5%, but we aim to reach closer to 10% over the long term. This will involve cost-cutting, market improvements, and real estate efforts to fill empty leases.
Q: What caused the $200 million decrease in cash at the holding company?
A: Andrew Teno, President and CEO: The decrease was primarily due to the payment of two distributions in the quarter, which is a timing issue as we don't pay out a distribution in the first quarter but pay two in the second.
Q: Can you clarify the situation with food packaging and the impact of softening demand?
A: Ted Papapostolou, CFO: Volumes were flat, but margins decreased due to pricing softening. The $5 million EBITDA drop was mainly due to the loss of high-margin fiber sales to Russia, which were replaced by lower-margin business.
Q: Is there room for improvement in North America's food packaging margins, and would consolidation help?
A: Ted Papapostolou, CFO: North America faces high waste levels, and we are working on a capital plan to modernize equipment to reduce waste. This could be capital-intensive and may require additional funding, but it is still in the planning stages.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
