Icahn Enterprises L.P. (NASDAQ:IEP) Q3 2019 Earnings Conference Call - Final Transcript

Nov 05, 2019 • 10:00 am ET

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Icahn Enterprises L.P. (NASDAQ:IEP) Q3 2019 Earnings Conference Call - Final Transcript

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Presentation
Executive
Keith Cozza

was primarily due to higher automotive service revenues, offset in part by a decrease in aftermarket part sales. Icahn Automotive Group continues to push forward with the multi-year transformational plan to restructure the operations and improve profitability.

During Q3, IEP issued 500 million of new senior notes due in 2024, at a coupon of 4.75%. We also paid down $1.7 billion of IEP senior notes due in 2020 in Q3 with cash on hand. Total debt outstanding at the holding company now stands at $5.6 billion. In Q3, we closed on our previously announced agreement to merge Ferrous Resources with a wholly-owned subsidiary of Vale.

IEP received proceeds of approximately $450 million for our equity and debt interests in Ferrous Resources subject to future closing adjustments, realizing a gain of approximately $250 million. We closed the quarter with a strong balance sheet and continue to search for undervalued investment opportunities across all of our business segments.

With that let me turn it over to Sung.

Executive
SungHwan Cho

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

In Q3 2019, net loss attributable to Icahn Enterprises was $49 million, compared to net income of $118 million in the prior year period.

As you can see on Slide five. In Q3 2019, the performance of our investment funds was a significant driver of our net loss for the quarter. This was partially offset by the gain recorded on the sale of Ferrous Resources that Keith mentioned earlier. Adjusted EBITDA attributable to Icahn Enterprises for Q3 2019 was a loss of $121 million, compared to a gain of $5 million in Q3, 2018. I will now provide more detail regarding the performance of our segments.

Our Investment segment had a loss attributable to Icahn Enterprises of $342 million for Q3 2019. The investment funds had a return of negative 7.4% in Q3 2019, compared to a negative 6.3% for Q3 2018. Long positions had a negative performance attribution of 5.2% for the current quarter, while short positions and other expenses had a negative performance attribution of 2.2%. Since inception in November 2004 through the end of Q3 '19, the Investment funds gross return is 101% or approximately 4.8% annualized.

The Investment funds continue to be significantly hedged at the end of Q3 2019, net short exposure was 16%, compared to a net short exposure of 37% at the end of Q2 2019. IEP's investment in the funds was $4.3 billion as of September 30th, 2019.

And now to our Energy segment. For Q3 2019, our Energy segment reported net sales of $1.6 billion and consolidated adjusted EBITDA of $235 million, net sales were down 16% from the prior year period, while adjusted EBITDA was flat. CVR Refining had a solid third quarter performance, despite tighter crack spreads and crude differentials in the third quarter this year. CVR generated strong quarterly results through improved capture rates