IEP - Earnings call transcript Q1 2020

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning, and welcome to the Icahn Enterprises L.P. Q1 2020 Earnings Call with Jesse Lynn, General Counsel; Keith Cozza, President and CEO; and SungHwan Cho, Chief Financial Officer.

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

Jesse Lynn

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.

not identified seeks, such of and estimates, and but be intends, expects, similar financial may about include, believes, statements Enterprises plans, will, are performance statements of by future L.P. as words anticipates, meaning the Icahn Forward-looking expected to, business limited or words and its subsidiaries.

duration our outcomes Securities factors materially of including results no the from Exchange unknown and otherwise required Actual related that known circumstances economic, and to will due no discussed the severity, uncertainties our revise law. expectations that by update pandemic. competitive, the and magnitude be is other should risks, events, other and filings our Commission, including any there to may factors, except differ We statements and assume of and obligation are change, Accordingly, in variety with as expectations realized. to COVID-XX assurance or legal a forward-looking

certain financial found reconciliation back includes can A be this non-GAAP in measures. the also GAAP measures comparable presentation. to presentation directly of measures This financial financial non-GAAP the such of most

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

Keith Cozza

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

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

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

be questions. then your will address We to available

Holding by loss at to per unit, was Enterprises the the Icahn $X.XX investment driven attributable net year in of or a million, had segment. and net to both The compared LP prior we loss $X.XX unit losses loss Investment billion, XXXX, per QX of primarily Company For LP period. or $X.X $XXX

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

in XXXX, of for earned of Investment to return return negative X.X% XXXX. negative QX compared QX a of of XX.X% Our Funds a

gains by by COVID-XX was certain which pandemic, were negatively impacted positions, significant large in equity index and by equity credit our disproportionately the positions. Performance impacted short offset long

QX of period. sales segment Net our to year Energy for compared XXXX $XXX million the for prior decreased by

Our lower and impacted pandemic. to destruction throughput negatively was refined Petroleum at refinery the caused Coffeyville product the price due war, oil by the demand segment within global planned the CVR unprecedented crude turnaround Energy volumes by COVID-XX

$X unsecured CVR senior the completed offering million of $XXX and a $XXX senior January, of billion unsecured in existing balance refinancing notes sheet. adding to cash million notes

and in basis. Net impacts sales and and of Automotive automotive for which revenues and service sales to pandemic revenue, growth have decline others in the experiencing revenues, an were QX organic until governments recently, actions contributed were our The of on $XXX the for services COVID-XX segment significantly the by commercial revenue million taken the XXXX. particular,

profitability. Icahn operations restructure improve Automotive continues forward with plan to and Group a the transformational to multi-year push

and senior During billion. due QX, debt IEP notes the add-on of $X.X issued XXXX outstanding at and notes $XXX Total XXXX. paid billion XXXX holding down $X.XX million now stands senior company at of

actively We strong opportunities, and of closed dislocations. the various pursuing resulting market are a economic position with quarter liquidity a from and number

to over Sung. it With turn that, let me

SungHwan Cho

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

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

period. the QX was our XXXX Slide a million of on driver of see EBITDA investment prior quarter. company and Enterprises can $XXX was to for loss attributable significant a for the you of our XXXX, of X, billion, a compared in to Adjusted $X.X net Icahn investments loss As holding the year loss in funds performance

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

for positions of attribution had while other XX.X% X.X% in Funds the for had QX a to Long for XXXX, QX attributes of Our positions current to XX.X% short QX negative quarter, XXXX. XX.X%. compared attributable performance $XXX attribution of of negative Enterprises loss and segment Investment Icahn a Investment of negative had The million return a net had return XXXX. positive performance a a

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

XX, $X.X Subsequent million billion $XXX the was to investment we the in Our as from fund. March redeemed quarter-end, XXXX. the funds of

And now to our Energy segment.

The lower planned demand turnaround, a and result impacted pandemic, volumes oil the in the adjusted product billion Coffeyville all sales and sales million consolidated of EBITDA For net EBITDA decline of consolidated loss dramatic combination of $X.X our million, the QX for billion year in reported to as period. due results for $XX of quarter. prior adjusted the Energy of and compared net COVID-XX XXXX, severely throughput segment crude prices the $X.X of to $XXX our cost

margin $X.XX the quarter, first the quarter pricing during by The margin during to impact led that significantly XXXX, an period XXXX. compared was $XX.XX $XXX Refining to dramatic was per of refining impacted in drop the barrel million. inventory in oil in valuation of same crude

Coast. start Gulf pipelines to In Texas of domestic crude were the due addition, from differentials new tighter the to West

the the million, margin the Excluding EBITDA in year. per compared $XX.XX to barrel million of adjustment to valuation prior valuation prior compared in refining year. inventory was was $XXX the impact inventory without Petroleum adjustments, $XX.XX, $XX

due a strong for price was EBITDA UAN. CVR reported is positive million and planting season. to of in with start Near-term XX Partners The million, of ammonia experienced XXXX. $XX $XX outlook Partners CVR compared to XXXX days for spring to the EBITDA downtime. QX lower decline unplanned QX primarily QX

environment. rates facing new several debt production light January and of minimum CVR at down the running proceeds the industry, debt. at $XXX up uncertainties of is adjust taken in million. the U.S. will end raised refineries QX $XXX the used volatility redeem and and billion It the In of has successfully of at $X refining Cash Energy million CVR and existing to on stood depending actions. its

deferred is continue of targeting the its Energy CVR expenditures million canceled environment. $X.XX to Liquidity the is evaluate the dividend reductions reduced current dividends has forward. to light per and capital going or strong and Board CVR’s CVR level remains expense in will reevaluating $XX also unit. CVR of for investments very its year. appropriate of

loss period, our down Now turning revenues million related prior Group in service COVID-XX. the remainder loss to were $XX from a Automotive EBITDA adjusted the decline prior $XX store net Icahn the with related the $XX to closures QX to of slowdown of and million to XXXX $XXX segment. year. sales in million, was Automotive and compared to XXXX QX a March due sales year of million, $XX for million

to XXXX transformational making multi-year The on Icahn Automotive push the to in and improve two company continues progress separation closing parts been markets businesses. profitability. restructure with and operations forward of was select the the Group XQ stores has a plan in

that Due year. for to in pandemic, Icahn the the parts Auto COVID-XX were has scheduled of closures later stores accelerated

company minimum corporate addition, match demand, to cost the has to functions savings measures staffing capital hours adjusted and spending at reduced store levels. In reduced and significant implemented

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

strong related increases, to products demand and Demand mix. pandemic. due in for increased is product remains seeing unfavorable volume by sales and foreign COVID-XX of Viskase effects increased to part exchange casing price global offset Net the and

impacted lower unfavorable And period. Metal due $X by that by XXXX segment. to net Net prior now compared $X were an for was sales conditions EBITDA to in market adjusted grades volumes. offset market QX at sales million our shipping increase year metals million decreased flat the and prices most selling to of

Estate $X year. or derived quarter compared Adjusted QX QX both Revenue net club decreased XXXX EBITDA for income million prior to the $X the compared period. segment prior the estate from real XXXX to And The our revenues prior now adjusted operations. year from of substantially period. to operations $X increased million QX in our from compared were generated Estate XXXX Real by by rental Real $X million and X% EBITDA, segment. year and for to million, operating the

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

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

personnel achieved compared producing and Early strong break-even WestPoint frontline in year. to continues to non-medical product this the WestPoint QX, EBITDA losing million new prior see process, for $X line. demand in to and facemask donated COVID-XX in started the

liquidity advantage our ample discuss We company our of will operating holding position. at opportunities. of I and the at liquidity maintain subsidiaries take to each attractive Now

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

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

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

you. can the Thank call you Operator, for please questions? open

Operator

of Our from Mangrove. comes line from question the Nathaniel August Instructions] [Operator first

Your line is open. now

Nathaniel August

my questions Hi, had I a you today. thank for taking couple.

seem bounced is, in but please does The you like on could you’re net if obviously, performance the it because, running first back, short. April, markets comment Fund Investment

me might gone And April beat get you? so hard to a how for for it’s on have

third billion. remainder where the you. prior was company I can or that? And the were then to But could account second saw or hoping about was, about expand on by that was where where debt. was a decline the And portfolio, question looks a to – that that of companies we investment supporting decline attributable reduction $X.X that holding that, I like it adding relative of of the you cash portfolio declined period in sort to you whether for Thank

Keith Cozza

the can about bounce I’ll for are is, that did And get way the XXF I sure. receive positions our are. our Hey, think a say questions. Keith, can investor our five short back. number. exact just I top net you April, it’s at long significant what if so at you fact look to specific and into the But look despite think we Yes, presentation, you want Yes, the that, thanks see you don’t April

the of Petroleum in Occidental like over names itself. some so and anywhere of from like And back you to XX% April, bounced month Caesars when at look them names, XXX%,

performance it’s But So a very April’s quite volatile strong. was market. again,

end just QX of to forward final April we’ll bounce back. I quarter, the with at the would So look commentary give the significant had a everybody that performance but updating

take question? Sung, did you want to second the

SungHwan Cho

previously on the going we on. beginning cash, two we quarter, there’s of invested the things One the into segment. billion cash And Yes. the Investment is, disclosed that, $X at primarily the of

other of impact the then net is $X debt went Investment major so the thing cash impacting two, the And the into refinancings. billion And segment. the cash of

debt. so, And additional of we $X.XX paid debt of and $X.XX billion off raised an then billion

$XXX around of reduction net million. a it’s So

Nathaniel August

That’s much. helpful. Thank really you very

Operator

you. Thank

question next [ph] of Systems. the Emery] Our Yellow comes Street from Yellow – [Lloyd from line

now Your line is open.

Unidentified Analyst

Good morning.

With the second your coming from high cost very advent going you. are regarding at you pay money of petroleum what question is, thoughts My soon, a electric come Thank Where vehicles the dividend. XX%? does of down? the

Keith Cozza

Sure.

depends first all quickly to So penetration. of vehicles it it’s I mass on – think the your gain view question, going on all are how electric

I very take a going think, probably generally, firm believe most that that’s than our to that, is to are longer not long currently – showing. time, forecasts does going

we’ll a electric I help never and we’re that production But you shut out predict to is vehicle And being to should about is price concerned but going. see – supply of to I balance short-term here. you in from overly be try can not demand, mean, things of see. where foolish the But would penetration enough in. oil have the lot

elect but As ultimate company, far as net the our from right – comes we our value, to money we the cash – but dividend, or and give stock. again, the shareholders out asset of obviously take

in And years low over stock, dividend portion so, years. taken the our has the has made prior of cash shareholder largest the which relatively

So manageable. fairly it’s

I balance, is, answer your out to our significant. think comes which So cash is it question of

Unidentified Analyst

Thank you.

Operator

next Our Instructions] of comes from from Fannon [Operator you. question Dan Jefferies. Thank the line

now is open. line Your

Dan Fannon

morning. good guys, Hey

stated I existing of dividend your bit on capital cutting just across which fungible. of at – a the question the regards ratio, coming just you I companies. various what – up I the segments, obviously, I a from it’s payout to you today of And all access with to the did know the the But mentioned outside what think coming to IEP the of from subsidiaries? is curious up paying up want from CVR, just But think any some portfolio to a is have existing dividend $X.XX. follow-up from the last So

Keith Cozza

Yes.

And I an which think today, off CVR real I CVR amount really our but on Estate estimate on don’t you a to that, the and flagged segment kick if a which know flagged, cash be which flow. is just $X.XX we the of to based have it’s it’s significant year. Energy, currently Real tends estate – going CVI, you portfolio currently.

Dan Fannon

liquidity a what perspective, healthy. guys you in is sit the you stats from to quite access And gave have of you obviously just terms Okay. where or large some and of

so, I market, are capital how you’re invest opportunities. aggressive And about markets you’re what even the in going tell this and – given I to to type thinking in. guess, certainly we’ve back, snapped But deploying know not are in us of are you though still there some dislocations going

hedge, shortened – cautious and be a you in fund about of just other what curious you there areas of where So guys’ environment know obviously side – lot you be? investment we you’ve your and how excited you may Obviously, but have other outlook a about in how or private could sectors are the terms you the are investing? this you’re

Keith Cozza

Yes.

Dan, I to lot finding think always we’re sort – areas we’re say, So than cautious, optimistic on still some and But is we invest positions. – existing of spoke. really worse of we’re outlook at last think, of I’d we’re And a economic looking the I our we’re obviously, pockets right?

deal Occidental worked But position as public, we we and ultimately some there But Saudi got when broke price a obviously. on Russia, out then war QX, what some our this took dislocation as is up you board in and seats. of out – oil, view advantage the saw dislocation ramped in out and in

And we’re picking spot. so

careful. finding We’re our speak, provide and really picking we be to going returns. certainly to long-term robust that so But yes, think areas spots, got are really you to

be the of short currently. at think our end to quarter And of still the we that capital value. we core with unlock always and some forward protecting catalyst names We’re the pushing can net while interested we’re some the in

So, and there. here short answer some pockets is, we’re finding

Dan Fannon

is position, short just market that with and on on to industries And or regards me, the excuse still kind Understood. more it getting your on that macro futures changed using more specific short net side? you’re has of stocks anything options – or

Keith Cozza

broad-based say, I’d high wouldn’t single material, more index portions primarily should described we that way the you way beta, been directional been But it, we – it. It’s call I shifting of say, maybe hedges. we’re primarily, have overly I name gotten more towards We’ve itself. view shifting valuation have XX%. sort to XX% of ahead maybe of has that, think stocks high-multiple just we it on

find to bit usual. little starting are a So more than

the a index last majority As but names, still it’s I over bit hedge trying from out pivoting macro. think few to years more single little index-based the to about and broad-based

Dan Fannon

some This of just the over question. Got on a I income fixed performed random of weeks? But one it. then the more. the kind asset last updates, some and some And concerns. and fixed we’ve and has they and about, the market any ETF during or TV of in kind time, is guess, XX been of high-yield this how Carl of talking market that given places classes and just of terms gone what income through any

Keith Cozza

mean, Carl I has done in really interviews. Look, of – a different good Yes. job outlining several I

ago, particularly on firm One that of the better a some playing about obviously, malls, he is opportunities estate marketplace, tremendously in that security – been being as he two I’d commercial mispriced. formed has overvalued and dramatically the on. And we say, real thesis out. thesis viewed years trade a a that is of the and the being

that, and been buildings, even trade of are risk amount have like referencing, a tremendous of those that mortgage-backed office anybody a the never unrelated that – on too. radar like of And which sort of in obviously lot hotels, a significant. of other a be now, to of losses of that besides were to the play these have malls it these suffering sort now loss malls, of going loans having in has have securities. indexes all what’s of interesting have the is the potentially They are he now problems, in losses lot that and has commercial lot But why have accelerated –

we trades. contribute one way a helped has been to it of the to think that’s So, and go. better It’s performance

Dan Fannon

Great. you. Thank I appreciate the all answers.

Keith Cozza

Thanks. Yes.

Operator

you. Thank

of comes from the next Our MidOcean. from line question Sullivan Robert

line Your open. now is

Robert Sullivan

could an kind with to positive slowdown? business of Hi. the I in just give was terms are was activity wondering, in update Group, what wondering getting of terms just if generally think that I on in And we just EBITDA? back closures, seen store just that you the Automotive you’ve of terms where you of generally, broad of level

Keith Cozza

Yes.

of you, side – open. our service both terms remains parts the what remind of building. the part to of and we’re just And so have same business So closing now and the closures, the in we’re that that right doing of stores service is, just within many the side building

that I’d Pep side – So, and that – it and the And within we’ve the and into say, do recirculating back service have. keep that Boys open. chain a closed the around of the service bringing core roughly remains lot stores inventory been part we’ve markets the DCs we we the throughout the size of stores denser remaining in XXX-ish around

I’d of most down not in many line And year-over-year. demand so did kind and in did towards of parts close, with considered players end XX%-ish service jurisdictions, of essential goes terms not – our of services, kind down the most – industry. was March, we’re the the roughly market but say, significantly. stores other In In overall the of of our stores demand automotive were distribution dynamics, auto aftermarket

reduced country from down it’s and orders, different the then, adjust recovered, staffing demand store as stay-at-home but significantly around I’d was So, still the lift that’s why last match adjust hours year. that since has geographies it say, to demand. important to

Robert Sullivan

what’s of in Gotcha. and taking segment significant broader turnaround? terms And long how terms a detour kind going your of broader I mean, COVID understand revitalization take get to the but that it’s just of is of outlook in this, I segment? just to a on

Keith Cozza

was doing throughout pent-up think, I of Well, to think, whole maybe rest actually really service I there, – doing see we’re going the And before demand year. the is actually some side well hit. the the crisis

pandemic pretty of optimistic there and some show service – get the to crisis. side we’re and recover we the on the growth in So, when ability out

still – and got on we’re order of stores back-office, be footprint, new parts And side, supply footprint optimize the for the in optimize our to the the chain with to we’ve have. new that rightsized we the

going so And early to year be that get probably next order that’s done. through in to

Robert Sullivan

Okay. very much. you Thank

Operator

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

Keith Cozza

Okay. We you good interest results and Have about to the joining everybody, appreciate in to talking forward Thanks, a day. Icahn your look summer. Enterprises, for us. in we’ll QX

Operator

gentlemen, and today’s Ladies participating. concludes call. conference this for Thanks

You may now disconnect.

Icahn Enterprises (IEP) 8 May 202020 Q1 Earnings call transcript