Icahn Enterprise LP Sees Green Shoots Amid Quarter of Mixed Results

The third quarter 2024 earnings call for Icahn Enterprise LP, led by President and CEO Andrew Tino, revealed a mixed bag of results for the company. The Private Securities Litigation Reform Act of 1995 provided a safe harbor for forward-looking statements made during the presentation, which included expectations for future performance and plans for business and potential acquisitions.

Despite the challenging quarter, Tino highlighted some positive returns in the investment fund, with an 8% increase. The company generated positive returns from single-name investments, led by healthcare and refining hedges, as well as significant interest income. However, losses were predominantly caused by broad market hedges, and CVR Energy was down due to cracks returning to levels mid-cycle or below.

The Automotive Services division struggled during the quarter, driven by lower-than-expected revenue from staffing and inventory management decisions. Although top members of management have been replaced at Pep Boys, Tino acknowledged it will take time for the division to reach its potential. He expressed confidence that EBITDA margins could be in the high single digits or double digits over a multiyear period.

The company ended the quarter with $1.6 billion in cash and cash equivalents at the holding company and an additional $800 million at the funds, providing a significant war chest for future opportunities.

Since the inception of their CVR investment in 2012, Icahn Enterprises LP has received dividends totaling over $3 billion. Tino expressed confidence that the refining market will eventually swing back, leading to renewed cash flow from CVR. In anticipation of this, the company announced a proposed tender offer to buy additional CVR shares.

The Board also reduced the quarterly distribution from $1 per depositary unit to $0.50 due to recent investment opportunities in both their portfolio and the market, as well as a desire to maintain their cash war chest. While some unitholders may be disappointed by this decision, Tino hopes that it will lead to increased capital returns in the future.

Tino also highlighted value creation potential in their top 5 disclosed names, with [ SWX] showing a gas utility closing its return on equity (ROE) gap to peers and separating utility services business for significant growth opportunity. The quarter's results demonstrate Icahn Enterprise LP's resilience amidst market fluctuations, setting the stage for future opportunities.

The company continues to navigate the challenges of their Automotive Services division while exploring opportunities in the refining market through investments like CVR. As they move forward, investors will be closely watching for signs of growth and capital returns.

Tino concluded that Carl's statement about having a significant war chest remains true, with $2.4 billion available for future investment opportunities or distribution to unitholders. The company remains committed to creating value for its stakeholders through strategic decision-making and calculated risk-taking.