Earnings call transcript: Icahn Enterprises Q2 2025 misses expectations

Icahn Enterprises L.P. (NASDAQ:IEP) reported its financial results for the second quarter of 2025, revealing a significant earnings miss. The company reported an earnings per share (EPS) of -$0.30, falling short of the forecasted $0.15, marking a negative surprise of 300%. Revenue also came in below expectations at $2.14 billion against a forecast of $2.40 billion, a shortfall of 10.83%. Despite these results, the stock saw a pre-market rise of 1.34%, trading at $9.10. According to InvestingPro analysis, IEP currently appears fairly valued, with a notable dividend yield of 22.27% and a 21-year track record of consistent dividend payments.

Key Takeaways

• Icahn Enterprises reported a $252 million increase in net asset value in Q2 2025.
• The company’s EPS and revenue significantly missed analyst forecasts.
• Stock price increased by 1.34% in pre-market trading despite earnings miss.
• Operational updates included closing 22 underperforming auto service locations.
• VIVUS initiated a pivotal trial for a new drug targeting pulmonary arterial hypertension.

Company Performance

Icahn Enterprises faced a challenging quarter with underperformance in key financial metrics. The company’s net asset value increased by $252 million, demonstrating some resilience in asset management. Its investment funds ended the quarter down 0.5%. The company maintained a quarterly distribution of $0.50 per depositary unit, signaling a commitment to shareholder returns despite financial setbacks. InvestingPro data reveals strong liquidity with a current ratio of 1.83, though analysts forecast a 9% revenue decline for the current year. Get access to 7 more exclusive ProTips and comprehensive financial analysis with InvestingPro.

Financial Highlights

• Revenue: $2.14 billion, down from the forecasted $2.40 billion.
• Earnings per share: -$0.30, significantly below the expected $0.15.
• Net Asset Value increased by $252 million in Q2 2025.
• Holding company cash and investments: $3.5 billion.
• Subsidiaries cash and revolver availability: $1.1 billion.

Earnings vs. Forecast

Icahn Enterprises reported an EPS of -$0.30, missing the forecasted $0.15 by a wide margin. This represents a negative earnings surprise of 300%. The revenue of $2.14 billion also fell short of the expected $2.40 billion, a decrease of 10.83%. The magnitude of these misses is significant compared to previous quarters, indicating potential operational or market challenges.

Market Reaction

Despite the earnings miss, Icahn Enterprises’ stock rose by 1.34% in pre-market trading, reaching $9.10. This movement is notable given the disappointing financial results, suggesting that investors may be optimistic about the company’s strategic initiatives or future prospects. With a beta of 0.66, the stock shows lower volatility than the broader market, and analysts project a return to profitability this year. The stock remains well below its 52-week high of $17.27, indicating room for recovery. Discover detailed valuation metrics and expert analysis in the comprehensive Pro Research Report, available exclusively on InvestingPro.

Outlook & Guidance

Icahn Enterprises is focusing on operational improvements and strategic investments. The company anticipates resolving RINs litigation, potentially removing a $548 million liability. Plans to add 16 new auto service locations by year-end reflect efforts to enhance operational efficiency. The trial of VIVUS’s new drug, VI-106, could offer long-term growth opportunities if successful.

Executive Commentary

• "We have a significant war chest to take advantage of opportunities as they arise," stated Andrew Tino, CEO, highlighting the company’s strong cash position.
• "We believe our asset is unique, and the FDA will evaluate the potential of this drug to be disease modifying," added Tino, emphasizing the potential impact of the new drug trial.
• "We continue to focus on building asset value and maintaining liquidity to enable us to capitalize on opportunities," noted Ted Papapostolo, CFO.

Risks and Challenges

• Operational inefficiencies in the food packaging segment could continue to impact profitability.
• The closure of underperforming auto service locations may present short-term financial strain.
• Market volatility and macroeconomic pressures could affect investment fund performance.
• Potential delays or setbacks in the VIVUS drug trial could impact future growth prospects.
• Regulatory challenges in utility investments may pose risks to strategic positioning.

Q&A

During the earnings call, analysts raised concerns about the decrease in cash balance. Ted Papapostolo explained that reductions were due to interest payments and LP distributions, addressing liquidity management and financial strategy.

Full transcript - Icahn Enterprises LP (IEP) Q2 2025:

Conference Operator: Good morning and welcome to the Icahn Enterprises L. P. Second Quarter twenty twenty ’5 Earnings Call with Andrew Tino, President and CEO and Ted Papapostolo, 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.

Robert Flint, Chief Accounting Officer, Icahn Enterprises L.P.: Thank you, operator. The Private Securities Litigation Reform Act of 1995 provides a Safe Harbor for forward looking statements as 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 on 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 L.P.: Thank you, Rob, and good morning, everyone. NAV increased $252,000,000 from the first quarter, driven primarily by positive performance in CVI, offset by decreases in this case in auto service. CVI share price increased by 38%, which when combined with additional share purchases of $32,000,000 led to an increase of $561,000,000 from the first quarter. Crack spreads have improved, especially diesel cracks, and we have no more planned turnarounds in 2025 and 2026. This enhanced cash flow profile has led to CVI recently paying down $90,000,000 of previously issued term loan.

Regarding RINs, we remain hopeful that the new administration may lead to the resolution of our outstanding litigation regarding small refinery exemptions, which has the potential to remove the $548,000,000 liability that was recorded as of the 2025 and potentially provide clarity to future years. We also announced that CVI’s CEO, Dave Lamp, would be retiring as of year end. His replacement, Mark Pytosh, is an internal promotion who has been the CEO of the fertilizer business and also led CVI’s midstream efforts for the past few years. The investment funds ended down approximately 0.5% for the quarter, primarily driven by gains in our consumer cyclical sector, offset by our broad market and refining hedges. Excluding the refining hedges, fund performance would have been a positive return of 2%.

Our auto service division remains a turnaround story. We are encouraged by the change in top line revenue. After seeing first quarter auto service revenue down 5% year over year, we saw revenue improve to 1% growth in both May and June, accelerate and it further in July. In our pharma segment, we have approved the initiation of VIVUS’ pivotal trial for the pulmonary arterial hypertension, or PAH asset VI-one hundred six. In short, this drug is meant to serve patients with advanced PAH who struggle to breathe, provide oxygen to the blood, and maintain mobility and or quality of life given a restriction of blood flow in their arteries leaving the heart to the lungs.

Currently, there are multiple alternative treatments in the market. The latest treatment is marketed under the name Winrevir. With any current PAH treatment, the patient may still require a lung transplant and or heart transplant, which will not address the underlying cause of PAH. We believe our asset is unique, and the FDA will evaluate the potential of this drug to be disease modifying. The trial will enroll 300 patients and includes unique analyses and clinical endpoints.

As the trial progresses, we will provide updates, with the first one expected in approximately twelve to eighteen months from now. We ended the quarter with $1,100,000,000 of cash and cash equivalents at the holding company, an additional $700,000,000 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 the 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, and benefiting from tremendous electricity load growth due to AI driven data center demand. We think electric utilities, particularly AEP, which has operations in real data center hotspots of Texas, Indiana, and Ohio, 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, seeing a push towards more favorable rate making in both Nevada and Arizona, and seeing attractive investment opportunities through the potential expansion of its FERC regulated gas pipeline. During the second quarter, SWIX was also able to execute on two sell downs of Century, its utility services division, getting the companies closer to a full separation.

We believe that Century should also see an attractive multiyear growth opportunity given continued investment in the electrical and gas grids needed to drive all of the infrastructure investment from data centers, electrification, and reshoring. At Caesars, we have an excellent management team with tremendous owned real estate value and a growing digital business that is deploying its greater than 15% free cash flow yield to repurchase shares and repay debt. We think the digital business is really underappreciated. In fact, in the second quarter, the digital business grew revenue 24% and EBITDA 100%. In time, we would expect Caesars digital business to be unlocked from its current structure as Caesars share price does not reflect the tremendous value of the business.

The funds ended the quarter approximately 2% net long. Adjusting for our refining hedges, the fund was 23% net long. And now, I will pass it on to Ted to cover our controlled businesses.

Ted Papapostolo, Chief Financial Officer, Icahn Enterprises L.P.: Thank you, Andrew. I will start at our Energy segment. Energy segment consolidated EBITDA was negative $24,000,000 for Q2 ’twenty five compared to $103,000,000 in Q2 ’twenty four. CVR’s refining business was negatively impacted by the unfavorable mark to market RINs valuation and reduced throughput volumes in connection with the turnaround that was completed earlier in the year. This was offset in part by positive performance in the fertilizer business due to continued high prices and strong utilization.

And now turning to our auto segment. Q2 twenty twenty five automotive service revenues decreased by $8,000,000 compared to the prior year quarter. Same store revenues were relatively flat as compared to the prior year quarter. For reference, a quarter ago, the same comparison was down 5%. The positive trajectory is attributed to our continued investment in labor, inventory, equipment, facilities, and marketing.

While the top line is improving, we are seeing higher labor costs and operating expenses associated with our continued investment. We anticipate these initiatives will improve long term profitability. To give a couple of examples, our shop labor is improving the average ticket price by increasing the number of work order attachments and we are renovating our facilities at our top performing stores to enhance customer experience and drive car count. During the quarter, we closed 22 underperforming locations, bringing the total to 44 for the 2025. To offset store closures, we continue to add to our greenfield pipeline in attractive markets and plan on adding 16 locations by the end of the year.

Now turning to our other operating segments. Real estate’s Q2 twenty twenty five adjusted EBITDA decreased by $2,000,000 compared to the prior year quarter. During the quarter, we sold one of our country clubs. This investment has been highly successful over the years as we were able to execute our strategy to build profitable luxury homes and operate an exclusive club, which in turn increased the value of both the club and the surrounding development. After years of investing in the club and selling through nearly all of our inventory, we have successfully achieved our strategy and monetized the club.

We intend to redeploy this capital to mirror these results in our recently acquired club in Pinehurst and we continue to seek new opportunities. Food packaging’s adjusted EBITDA decreased by $9,000,000 for Q2 ’twenty five as compared to the prior year quarter. The decrease is primarily due to lower volume, higher manufacturing inefficiencies and interim disruptive headwinds from the restructuring plan we announced last quarter. We anticipate continued operational inefficiencies during the implementation phase, which we expect to be substantially complete by the 2025. Both Home Fashion and Pharma’s adjusted EBITDA were flat when compared to the prior year quarter.

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 3,500,000,000.0 and our subsidiaries had cash and revolver availability of 1,100,000,000 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?

Conference Operator: Thank you. Star one one again. One moment please for our first question please. It comes from Andrew Berg with Post Advisory Group. Please proceed.

Andrew Berg, Analyst, Post Advisory Group: Hey, either Andrew or Ted. Just a quick question with respect to the decrease in the cash balance, was most of that I’m referring to cash at the holding company level, the 1.86 Was most of that attributable to the increase in the CVR shares? Or can you just help reconcile the change from last quarter?

Ted Papapostolo, Chief Financial Officer, Icahn Enterprises L.P.: Yeah, the big drivers of the decreases we have are interest payments, four of the six tranches paid in the quarter. And we also had two of the LP distributions paid because in Q1, you don’t have one, but it hits in Q2. Those are two big drivers and to an extent the CVR repurchase, but that was about $32,000,000 in a quarter. Okay, perfect. Thank you.

Conference Operator: Thank you. And I’m not showing any further questions in the queue. I will turn it back to management for any final comments.

Andrew Tino, President and CEO, Icahn Enterprises L.P.: All right. Well, thanks, everyone, for joining. We’ll talk to you next quarter.

Conference Operator: Thank you, ladies and gentlemen, for participating in today’s conference. You may now disconnect.

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