IEP - Earnings call transcript Q4 2019

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Operator

Good morning, and welcome to the Icahn Enterprises L.P. Fourth Quarter 2019 Earnings Call with Peter Reck, Chief Accounting Officer; Keith Cozza, President and CEO; and SungHwan Cho, Chief Financial Officer.

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

Peter Reck

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

it Now, to I’ll turn over Keith Cozza.

Keith Cozza

and Thanks, Peter. Good quarter to morning, conference welcome earnings Icahn call. XXXX Enterprises fourth the

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

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

We to be your available questions. will then address

per QX Icahn to driven income prior loss was expense quarterly we Enterprises Automotive net to for had $X.XX unit $XXX segments. Enterprises loss of attributable year million For Icahn billion, to $X.X billion, was XXXX. a net XXXX LP net interest compared our losses $X.X $XX.XX of the unit, Holding Company in The in compared per of at income million, Net to loss attributable XXXX, and LP or period. by $XXX primarily

Enterprises million offset Icahn loss gain of full-year to a results strong by in $XXX in segment, XXXX the was EBITDA million, XXXX. our loss Automotive attributable of The driven segment. to and by in interest was losses $XXX Investment compared Energy Adjusted a expense, for

XX% short from positions, of our equity net short the We by XX%, partially gains end ended exposure notional negative XXXX. XXXX losses bringing our return of full-year performance positive was of compared short in total XXXX index XXXX exposure net from Funds at equity of our XXXX, the by earned QX with long Investment a Our driven notional return to for positions. XX.X%. offset to X.X% core

CVR’s performance increases Our Energy increased higher and net spread. benefited year-over-year and despite segment driven net segment’s Petroleum by adjusted sales segment in solid higher rates, capture $XXX higher EBITDA margins, rates, EBITDA refining $X.X year. fertilizer sales pricing. XXXX were Fertilizer was CVR’s had a crack lower achieved and income billion million. and and consolidated stronger was volumes throughput from product

in service and Automotive sales Group our profitability. Net with for to the improve and multi-year segment XXXX. restructure push continues billion Automotive transformational plan $X.X were revenues a to forward operations Icahn

to a in $XXX add-on XX-year issued billion XXXX of $X.XX senior X.XX%. of During Subsequent we XXXX. senior IEP $XXX approximately coupon XXXX, notes QX, due million year-end, million new issued down and paid with and IEP due our of notes XXXX notes in of our to

total billion. holding stands Our company $X.X at at debt currently outstanding the

with believe the – we We sheet, are volatile to navigate these and we quarter closed we closed this well-positioned balance strong financial markets.

me to over let it Sung. that, turn With

SungHwan Cho

Thanks, will begin balance then our highlight performance consolidated I our our results Keith. of segments sheet. on reviewing operating the and comment by briefly and

$XXX of to to loss compared net to income period. a income net $X.X attributable For prior Full-year Icahn QX for loss million, Enterprises Enterprises $XXX to in of was million net in as attributable was net XXXX. compared billion, XXXX the billion $X.X XXXX, year Icahn

for sale gain on the were offset the by on driven by of was and significant and losses Tenneco recorded Company net interest Slide performance on the Funds Company As you investments loss Investment our Company XXXX. our mark-to-market in the the our can quarter the Holding driver see X. Holding of year. XXXX, – Resources Ferrous This expense. third loss a the of of In partially was Holding

Enterprises a to million a XXXX. compared gain of of Icahn to XXXX loss in attributable $XXX million, was EBITDA Adjusted for $XXX

loss a to Icahn attributable compared to in the $XXX of adjusted QX For year EBITDA was million, million XXXX, period. prior Enterprises $XXX

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

XXXX for gain gain had million of a QX loss attributable XXXX, of compared X.X% a and in Enterprises million full-year. QX a segment Investment to Icahn $XX to gain Our of for XXXX. a X.X% Investment had the $XXX The QX Funds for

Long positions short quarter, negative attributes XX.X% performance for attribution had and positions gained other – current a XX% the XX.X%. performance of while

positions the gain XX.X%, XXXX. negative attribution a performance had had a segment of XX.X% for full-year while X.X% For of the had to of in XXXX, full-year loss XX.X% positions the a Investment Long compared XXXX, gain short a

the of end net be XXXX, short of Investment XX% at to The XXXX, XX% the short the of end and to annualized. XX%, XXX%, Investment the end At gross X.X% inception Since Funds through XXXX, in the net net QX compared of XXXX at XXXX. hedged. the or continue end Funds return were is funds short

Holding Our XXXX. additional was hand an billion invested Company. to investment in billion the $X.X funds $X of the December as the we year-end, XX, funds with on Subsequent cash at in

And segment. now Energy the to

sales adjusted of segment EBITDA compared net consolidated $X.X XXXX, of for billion our prior EBITDA the million, sales consolidated QX reported adjusted and million net and $XXX $X.X For Energy of $XXX of to billion period. year

Midland production Crude barrel the differentials of to XXXX was due tightened per a quarter, QX for compared startup of adjusted Canada. Gulf per prior million [ph] the had to quotas the $XXX fourth the the solid in period, the barrel million year. pipelines period. Coast compared in in Refining’s $XX.XX refining $XXX significantly EBITDA to in CVR Refining generating to year prior $XX.XX in XXXX, margin compared to and CVR

CVR XXXX Partners adjusted compared of $XX reported to in million EBITDA QX $XX XXXX. million, QX

and million, sales to and consolidated $XXX $X.X of million billion of segment of sales energy compared $XXX adjusted full-year EBITDA of in XXXX. consolidated the For the $X.X billion net XXXX, EBITDA adjusted reported

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

$X.X loss the compared loss $XX million, X% EBITDA revenues billion, sales up for year period. adjusted of period. a prior Full-year to $XX prior net and XXXX million from were XXXX the of year was service QX a

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

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

service We and continue store have our DC of our accelerated footprint business the invest in and restructuring growing business. parts to

and EBITDA decreased our to Packaging adjusted prior by net to XXXX turning $X million year compared sales $X QX Food segment. Now million the decreased period. by consolidated

to For or decreased to price volumes decrease the prior unfavorable X% XXXX, year and effects exchange, by product offset sales the full-year mix. net The foreign primarily $XX due period. increases was and the lower of in million, part due from by

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

sales significantly Metal volumes down EBITDA China. And from our was now adjusted and prior compared net impacted Non-ferrous to the million QX to pricing and shipment by $XX million be $X continued decreased low year. to by segment. demand XXXX

ferrous decrease prices XXXX, the prior $XXX and decreased shipment $X most prior selling for was period. Adjusted volumes or to of non-ferrous metal. was $XX the grades full-year lower compared year and lower XX%, million by net million, million due year. market of EBITDA to the XXXX in materials sales sales was for Net which The below

year. XXXX net segment. QX now decreased year our XX% to EBITDA period. compared Adjusted or the by million, $X operating million the Estate prior Real to $X And to decreased QX by for revenues prior compared

were which estate operations. $X the full-year operations from prior and year. below from the our income and were million For for substantially $XX Real Revenue operating club XXXX, Estate rental real XXXX both derived was XXXX million, revenues

adjusted XXXX, million The several Real the with our for compared $XX EBITDA $XX of segment Estate sale properties This XXXX the of to changing net-leased receivable of reflects and portfolio property in income to million sales. XXXX. related mix in generated

XXXX VSS were in part lower our XX% XXXX, sales volume net segment. period. to sales turning compared organic acquisition higher offset up to in Home Now, WestPoint’s by was attributable prior sales. the net the to QX year QX Fashion

period. Adjusted the net margins sales compared XXXX Gross year million disclosed, to to hospitality WestPoint’s to business strengthens extends in Home to year market a the period. for focus U.S. for institutional was our to the acquisition $X and net percentage compared it as XX% of the XX% XXXX break-even segment EBITDA previously in Full-year addressable sales compared of for and were was VSS of prior XXXX. international X% As the Fashion prior markets XXXX, as outside up a loss for

attractive the we able and at will maintain to discuss liquidity out opportunities. each and subsidiaries Holding We advantage far debt XXXX. take debt so were refinance our liquidity operating of of In I XXXX, in ample position. of and to billion XXXX maturities extended $X at Now our to Company

XXXX totaling billion. availability Investment approximately QX $X.X ended equivalents, revolver cash with investment We and our in Funds cash, the

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

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

call can for please Operator, questions? open the you

Operator

with session. [Operator from first as with Peter our our Thank take Please Q&A proceed now Voell comes your question. you. questions Mangrove. We’ll part of Instructions] question And

Nathaniel August

Hi, the performed there. volatile Nathaniel fund how Peter. has out two you been August this date market for the first you pretty an months, is give on my Could through Thank please? It’s taking update for on a to hedge quarter question. us

Keith Cozza

inter-quarter do Yes. provide the fund it We sheet We balance the don’t date. on just guidance performance. on

Nathaniel August

the investment, the leveraged? So year. $X.X extent looking that’s end and the at net that your itself fund that’s So to billion like Okay. at it’s the hedge some fund about the net give equity dollar how that see a of I the for every $X asset asset the Is value And for hedge the dollar does much every $X insight value, investments could equity of has? funds? into have gross or invested us or fund of $X in some it you

Keith Cozza

we you’ll when later very mean, see our of file a I – leverage. XX-K amount would it’s I using modest today. Yes.

fell some has both liabilities $X.X to – $XX of liabilities, liabilities security of and billion to relate you give segment context, Just of our assets just billion Investment those short. half over

pretty sort $XX or a think, it I balance think total you the small capital it’s the of the billion, your question, that, amount when investment the math. portfolio So of left-side sheet $X do leverage, can answer of So the is so versus you implied way right? billion of to of like itself, of

Nathaniel August

Okay.

not gross well? more you’re as then long than XXX% So

Keith Cozza

short’s, the gross gross XXX%, would absolute a So…. take the an basis, on of No, on the – long’s basis gross no, and the be we’re absolute a you – right? on – over basis because value

Nathaniel August

long I was the talking about just side?

Keith Cozza

Just just the we’re you the long, long XXX%. on say I side, roughly guess, could yes,

Nathaniel August

Okay.

So then that that derivatives? the is through net achieved mostly you short exposure credit

Keith Cozza

it It’s actually through – derivatives. equity of would majority be

Nathaniel August

Okay.

And great. you from understand it turning and help the changed integrate auto like division, decided drove seems industrial when that what Pep just Could those the businesses. you then bit saw strategy acquired you that perspective to originally little to from there decision? a Boys Okay, us has just an

Keith Cozza

Yes.

high ultimately I a from is, players think at and we the think programs. could we thought – store well, years I ago four side, strategy only expanding but side to by not our with that, of try grow commercial the the from bigger service some to that it summarize compete the level

national years is, of determined the very side is decent the or likes difficult where going to sort be what the big or certain over advanced it’s But And two guys an to that, markets, we in level the we’ve compete on store store can have last we density. I against with O’Reilly a compete an of on right? think AutoZone

a store so and And of pair we’re strategy side focus business to has the service have of core and commercial business position what the where where been and change and growth – separate the the – split tailwind. side quite we out in of have we think a very lot doing certain are well in basically I the down competitive markets, decent

Nathaniel August

actually of especially within to But move estate, these business. a us down what’s Okay. happening the a little opposite fair on of Could And as noticed I earnings? up some know give then is small lastly, of your bit. NAV what’s there, part a in year-over-year, I amount sort color driving direction it’s but that you real EBITDA any

Keith Cozza

Yes.

terms in lease estate, the real assets pretty on certain portfolio. So we’ve active from been of selling net

from we those realized as lose And so lease stream related the the years, see, properties, think last over couple income properties. I you’ll the of net-leased significant we’ve sell gains we portfolio. to But

And so, also be that’s within the on properties there, But it you’re reported depending a a little operations. of development sales one development the decline of in the going to lumpy could see why houses EBITDA. reasons the and in

Nathaniel August

Okay.

the from up made using repay a within you are to is going attractive the the then proceeds debt division, net-leased the estate So real little NAV you’ve sales properties bit? that and to hence

Keith Cozza

in Holding Well, distributed all Company debt there cash no the is and the division, real is essentially to back up that cash. estate

Nathaniel August

questions. Okay. Thank my answering for you

Operator

Thank question next from Please Fannon question. you. comes our Dan Jefferies. with with your And proceed

Dan Fannon

necessarily there excited that might high-level performance, an sectors be just reviews obviously, looking you Yes. Good or question a I parents doing fund on the you or well, you perspective? some kind went about think, the into – for or position macro guess, just morning. the of number not about a we update kind net of could that have, if XXXX guess are the said I of of kind from of on bit guys that the got investment from just areas a year-end, billion-dollars post if themes think I about an the view more short at the but rough as little year-end. you talk you’re

Keith Cozza

Yes. question and last the the it’s – to Keith. uncertainty obviously Hey, there’s the weeks. that on to reach of activity two so the I Well, economic of But related think contraction fairly of down to in upside related turned Dan, answer extent lot a based virus. is

comment. to hard it’s So

those on. and engaged – mean, that’s the is potential they’re I positions would some that large of fights secret some I of and core actively positions there’s certain excited sort we’re core they’re our no upcoming where And But of large on. very with proxy that that, say we’re for our investments about some focus

there fund level. way I HoldCo fund They – at they was and significant into is the funds. think to that down And excess being about think opportunities some when much horizon. excess the on the the contributed have the cash the just billion-dollars and IEP cash money put has the

all large to a for billion-dollars a that think, while to I held new the really some always I couple for value. think catalyst was. exploring we core So the trying that although, unlock positions have But that’s we’ve we’re be we’re, opportunities, of we’re

Dan Fannon

Thank Understood. you.

Operator

with Post And Group. your Thank Instructions] Andrew Advisory question Berg you. [Operator Please next our question. with comes from proceed

Andrew Berg

update fund. I potentially maybe Hey, guys. though, inter-quarter you any position net whether that you on in commentary hedge Keith, give know an give on short Can XQ? the us increased

Keith Cozza

short – helpful. I’m than we’re Yes. not other to obviously, position going to that, been quite update the it’s net say

Andrew Berg

I would think.

Keith Cozza

mean, I about of that short majority been a indicative. S&P this, …quarter is XXX. position net reminder, we’ve as fairly open

Andrew Berg

I the Yes. figure. saw

you. Thank Okay.

Operator

questions Thank you. queue. And in have currently more no I

Keith Cozza

in about in Thanks, and talking Enterprises, Okay. everybody. results forward appreciate Icahn we’ll We you to interest look to first quarter May. your

Operator

Ladies conference. and today’s for you gentlemen, this concludes participating. Thank

disconnect. now You may

Icahn Enterprises (IEP) 28 Feb 202019 Q4 Earnings call transcript