Earnings call transcript: Icahn Enterprises’ Q1 2025 sees EPS beat, stock drops

Icahn Enterprises LP (NASDAQ:IEP) reported its first quarter 2025 earnings, surpassing expectations with an earnings per share (EPS) of $0.50 against a forecast of $0.21. Despite this strong performance, the company’s revenue fell short of expectations, coming in at 2 billion dollars compared to a projected 2.63 billion dollars. The market reaction was negative, with the stock price decreasing by 3.58% in pre-market trading, closing at $8.41, a significant drop from its last close of $8.72. According to InvestingPro data, the stock is currently trading at 56% below its 52-week high of $19.10, with analysts setting a consensus target price of $15.00.

Key Takeaways

• Icahn Enterprises’ EPS significantly exceeded forecasts, reaching $0.50 versus $0.21 expected.
• Revenue fell short, reported at 2 billion dollars against a forecast of 2.63 billion dollars.
• The company’s stock declined by 3.58% following the earnings release.
• The automotive segment saw a decline in sales by 9% year-over-year.
• Energy segment EBITDA was negative, contrasting with a positive figure from the previous year.

Company Performance

Icahn Enterprises showed a mixed performance in Q1 2025. While the EPS beat expectations, the revenue shortfall highlighted challenges within the company’s operations. The automotive segment experienced a 9% drop in sales year-over-year, and the energy segment reported a negative EBITDA of 61 million dollars, down from 3 million dollars in Q1 2024. Despite these hurdles, the company maintained a strong liquidity position with total liquidity of 3.8 billion dollars.

Financial Highlights

• Revenue: 2 billion dollars (forecast was 2.63 billion dollars)
• Earnings per share: $0.50 (forecast was $0.21)
• Net Asset Value decreased by 336 million dollars in Q1 2025
• Total liquidity: 3.8 billion dollars

Earnings vs. Forecast

Icahn Enterprises posted an EPS of $0.50, significantly above the forecasted $0.21, representing a surprise of over 138%. However, the revenue of 2 billion dollars was below the forecast of 2.63 billion dollars, marking a substantial miss. This mixed result reflects the ongoing challenges in some of the company’s segments.

Market Reaction

Following the earnings announcement, Icahn Enterprises’ stock fell by 3.58%, with the last trading price recorded at $8.41. This decline places the stock closer to its 52-week low of $7.27, reflecting investor concerns over the revenue miss and operational challenges despite the EPS beat.

Outlook & Guidance

Looking ahead, Icahn Enterprises expects improvements in its automotive segment sales and profitability. The company is also exploring real estate opportunities and remains focused on resolving a 438 million dollar RINs litigation. The guidance for future quarters includes EPS forecasts ranging from $0.14 to $0.23, with revenue forecasts showing a gradual increase.

Executive Commentary

CEO Andrew Tino highlighted the company’s strategic focus, stating, "We have a significant war chest to take advantage of opportunities as they arise." He also noted the potential of AI-driven growth in the utility sector, saying, "We think AI growth is real and electric utilities, particularly AEP, are an excellent way to benefit in the picks and shovels of AI."

Risks and Challenges

• Decline in automotive sales and negative energy segment EBITDA could affect future performance.
• Revenue miss indicates potential operational inefficiencies that need addressing.
• Ongoing litigation and market volatility present financial risks.
• The need for strategic real estate and automotive segment restructuring.

Q&A

During the earnings call, analysts questioned the strategy behind the closure of underperforming automotive stores and the potential real estate opportunities arising from these closures. The management confirmed a modest positive performance in public portfolio investments and emphasized their focus on liquidity and asset value growth.

Full transcript - Icahn Enterprises LP (IEP) Q1 2025:

Call Operator/Moderator: Good morning, and welcome to the Icahn Enterprise LP First Quarter twenty twenty five Earnings Call with Andrew Tino, President and CEO Ted Papapostolu, Chief Financial Officer and Robert Flint, Chief Accounting Officer. I would now like to hand the call over to Robert Flint, who will read the opening statement. Please go ahead.

Robert Flint, Chief Accounting Officer, Icahn Enterprises LP: 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. Forward looking statements may be identified by words such as expects, anticipates, intends, plans, believes, seeks, estimates, will or words of similar meaning and include but are not limited to statements about the expected future business and financial performance of Icahn Enterprises LP and its subsidiaries. Actual events, results, and outcomes may differ materially from our expectations due to a variety of known and unknown risks, uncertainties, and other factors that are discussed in our filings with the Securities and Exchange Commission, including economic, competitive, legal, and other factors. Accordingly, there is no assurance that our expectations will be realized.

We assume no obligation to update or revise any forward looking statements should circumstances change except as otherwise required by law. This presentation also includes certain non GAAP financial measures, including adjusted EBITDA. A reconciliation of such non GAAP financial measures to the most directly comparable GAAP financial measures can be found in the back of this presentation. We also present indicative net asset value. Indicative net asset value includes, among other things, changes in the fair value of certain subsidiaries which are not included in our GAAP earnings.

All net income and EBITDA amounts we will discuss are attributable to Icahn Enterprises unless otherwise specified. I’ll now turn it over to Andrew Tino, our Chief Executive Officer.

Andrew Tino, President and CEO, Icahn Enterprises LP: Thank you, Rob, and good morning, everyone. NAV decreased $336,000,000 from the fourth quarter of twenty twenty four, driven primarily by negative performance in the funds and the accrual for the distribution, which was partially offset by increases in CVI and auto service. CVI share price increased by 3%, which when combined with additional share purchases of $33,000,000 led to an increase of $80,000,000 from the fourth quarter. The improvement in crack spreads that we discussed last quarter has continued and now that Coffeyville’s turnaround is complete, we look forward to getting back to business and generating cash flow. Regarding RINs, we remain hopeful that administration may lead to the resolution of our outstanding litigation regarding small refinery exemptions, which has the potential to remove the four thirty eight million dollars liability that was recorded as of 1Q twenty twenty five and potentially provide clarity to future years.

As a reminder, during the last Trump administration, Wynnewood received small refinery exemptions. The investment funds ended down approximately 8.4% for the quarter, primarily driven by our health care investments. Given the recent market volatility, we thought it would be helpful to provide an update as to performance through the end of last week. If you were to mark to market the funds and add in CVI and UAN, we would be modestly positive quarter to date. We ended the quarter with $1,300,000,000 of cash and cash equivalents at the holding company, an additional $900,000,000 of cash at the funds.

So as Carl likes to say, we have a significant war chest to take advantage of opportunities as they arise. Lastly, the board has maintained a quarterly distribution at $0.50 per depositary unit. Now turning to our investment segment. Despite the market volatility, we see considerable value creation potential in our portfolio. At AEP, we see new management closing its ROE gap, improving regulatory outcomes, solidifying its balance sheet through accretive asset sales, and benefiting from tremendous electricity load growth due to AI driven data center demand.

We think AI growth is real and electric utilities, particularly AEP, are an excellent way to benefit in the picks and shovels of AI. At SWICS, we see a gas utility that is closing its ROE gap to peers and separating the utility services business with significant growth opportunity. We see upside in both the gas utility and the services business. In particular, Century should see increasing growth trends as utility customers need to spend additional CapEx to improve and build out both the electrical grid and natural gas networks to support increasing power demands. At Caesars, we recently had two employees join the company’s board of directors.

We think Caesars has an excellent management team with tremendous real estate value, a growing digital business that is deploying its greater than 15% free cash flow yield to repurchase shares and repay debt. In time, we would expect Caesars digital business to be unlocked from its current structure. The funds ended the quarter approximately 20% net long. Adjusting for our refining hedges, the fund was 35% net long. And now I will pass it on to Ted to cover our controlled businesses.

Ted Papapostolu, Chief Financial Officer, Icahn Enterprises LP: Thank you, Andrew. I will start at our Energy segment. Energy segment consolidated EBITDA was negative $61,000,000 for Q1 twenty twenty five compared to $2.00 $3,000,000 in Q1 twenty twenty four. PVR’s refining business was negatively impacted by the turnaround at the Coffeyville refinery and unfavorable mark to market RINs valuation, offset in part by positive performance in the fertilizer business due to continued higher prices and strong utilization. Turning to our Automotive segment.

Our Automotive segment continues to underperform compared to prior year period. Sales were down 9% year over year. Excluding the wind down of the parts business, which is now complete, sales were down 6%. In order to give the business the resources it needs to succeed, we are investing in labor, inventory, equipment, facilities, marketing and adjusting our distribution footprint. We saw early signs of top line improvement as we have experienced positive trends in car count, tire volumes and revenue as we move through the quarter.

Adjusted EBITDA in the quarter was negative $6,000,000 Profitability suffered as we work to get the labor hired, optimized and trained, the inventory in the right place at the right margin and upgrade the facilities and equipment earlier in the year so that we can benefit as the year progresses. We believe that while painful in the short term, these are the right investments to improve long term profitability. The store portfolio is also going through significant changes. We are closing money losing locations and growing in areas we have historically generated strong profitability. During the quarter, we closed 24 underperforming locations.

We were awarded a contract to operate approximately 15 locations on military basis that allow us to grow in a capital light manner. We have been adding additional locations to our greenfield pipeline and our leasing efforts for the excess and available space continue to bear fruit as we have approximately 60 properties under LOI. We continue to believe that our auto segment will see increasing sales, profitability and cash flows over the coming quarters. Now turning to the other segments. Real estate’s Q1 twenty twenty five adjusted EBITDA decreased by $1,000,000 compared to the prior year quarter.

As a reminder, we have limited inventory at our legacy Country Club and expect to be sold out during 2027. We are expecting to see increased single family home sales from our newest Country Club, which has recently cleared the permitting process, and we expect to begin taking home sale reservations by the end of twenty twenty five. In addition, our resort property continues to perform at high levels. On our last call, we discussed a potential sale of certain properties, which was expected to be complete during Q1. This is now expected to close during this quarter.

We are also exploring the sale of additional properties in our portfolio, which is successful could close later this year. In addition, we are actively seeking new opportunities that fit our investment strategy. Food Packaging’s adjusted EBITDA decreased by $6,000,000 for Q1 twenty twenty five as compared to the prior year quarter. The decrease is primarily due to lower price, higher manufacturing inefficiencies and higher material costs. During the quarter, the business commenced a restructuring plan, which includes consolidating two North American facilities into one and adding a state of the art manufacturing line.

We anticipate this plan will increase operational efficiency and drive margins while maintaining volumes and is expected to be completed during the second half of twenty twenty five. Home Fashion’s adjusted EBITDA decreased by $1,000,000 as compared to the prior year quarter, mainly driven by product mix. Pharma’s adjusted EBITDA for Q1 twenty twenty five came in lower by $3,000,000 as compared to the prior year quarter. The decrease is primarily due to higher R and D spend for the therapies in clinical development and increased sales and marketing expenses due to the recent global product launch of QCiva. And now turning to our liquidity.

We maintain liquidity at the holding company and at each of our operating subsidiaries to take advantage of attractive opportunities. As of quarter end, the holding company had cash and investment in the funds of $3,800,000,000 and our subsidiaries had cash and revolver availability of $1,300,000,000 We continue to focus on building asset value and maintaining liquidity to enable us to capitalize on opportunities within and outside our existing operating segments. Thank you. Operator, can you please open up the call for questions?

Call Operator/Moderator: Your first question comes from the line of Andrew Berg of Post Advisory Group. Please go ahead.

Andrew Berg, Analyst, Post Advisory Group: Thanks, guys. Appreciate all the information. If we can just go back to the automotive segment for a second. Can you give us some idea with respect to the store closures? Right now, how many stores are four wall EBITDA negative?

If possible, what the aggregate EBITDA loss is for those stores and the expected timing to get out of any of the money losing stores?

Andrew Tino, President and CEO, Icahn Enterprises LP: Hey, Andrew. So we’re not going to talk about the aggregate amount of store closures just because it impacts the business and the employees. I would say that we have, there’s a good amount of stores where they used to make significant money called back in ’twenty two or ’twenty three, which are currently money losing today. And those stores, think you’d, we’re taking a hard look at what caused them to decline and how do we make them better. And then there’s a whole host of other stores where profitability has suffered for some time and those will be closing.

So we will be closing them, the money losing stores that we want to close in relatively short order, we’ve been averaging something like eight a month. And I think it also depends on whether we own the location or whether they’re leased. So if landlords are reasonable or if they feel like they can release the box at a attractive rate, we hope to get out of those pretty quickly and we’ll exit. In other situations, we may just wait until the lease turns out.

Andrew Berg, Analyst, Post Advisory Group: Okay. And the ones you’re getting out of, are you getting stuck with any dark store lease expense or for the most part, when you’re getting out of them, we’re able to close and not have that liability as a tail?

Andrew Tino, President and CEO, Icahn Enterprises LP: Yeah, so some of them are actually opportunities. So we actually had one of our worst performing stores that was money losing in the box in an area that we thought would be a liability and turned out to be a bit of a bidding war and we sold it for $4,000,000 and it was on a real estate value, I think closer to 2,000,000. But on the OpCo, you would have seen it as a negative value. So there’s a whole host of boxes, each one’s different. Some, we’d expect if Pep Boys exits their box, we may actually lease it to one of the competitors if it’s far enough away not to impact our own operations.

So I think a large part of the portfolio should not really be considered a liability. It’s more of an opportunity to make much more money.

Andrew Berg, Analyst, Post Advisory Group: Then, sorry, going back to the update you said, you’re up, what did you say, a couple hundred million in indicative net asset value quarter to date?

Andrew Tino, President and CEO, Icahn Enterprises LP: I don’t think we said that. I think if you were to look at our public portfolio, so everything in the funds and then the publicly marked investments, CVI and UAN, so we were modestly positive as of last Friday.

Andrew Berg, Analyst, Post Advisory Group: Okay, perfect. Thank you.

Andrew Tino, President and CEO, Icahn Enterprises LP: You got

Call Operator/Moderator: I will now turn the call back over to Andrew Tino, President and CEO, for closing remarks. Please go ahead.

Andrew Tino, President and CEO, Icahn Enterprises LP: All right. Well, thank you, everyone, for joining today’s call. We’ll speak to you in a few months.

Call Operator/Moderator: Ladies and gentlemen, that concludes today’s call. Thank you all for joining. You may now disconnect.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.