Icahn Enterprises(IEP) - 2023 Q4 - Annual Results

Financial and Operational Highlights Icahn Enterprises (IEP) reported a narrowed net loss and improved Adjusted EBITDA for Q4 2023 compared to the prior year. However, its Indicative Net Asset Value (NAV) decreased sequentially to $4.76 billion, primarily due to hedging losses and unitholder distributions. The company maintained a strong cash position of $2.7 billion and declared a quarterly distribution of $1.00 per unit Q4 2023 Key Metrics | Metric | Value | Change vs. Q4 2022 | | :--- | :--- | :--- | | Net Loss Attributable to IEP | $139 million | $116 million improvement | | Adjusted EBITDA Attributable to IEP | $9 million | $84 million improvement | | Indicative Net Asset Value (vs. Q3 2023) | $4.76 billion | $411 million decrease | | Quarterly Distribution | $1.00 per unit | - | - The company's cash position across the Holding Company and Investment segments was $2.7 billion as of year-end 2023[1] - IEP defeased its 2024 notes in December 2023, pushing its next note maturity of $750 million to December 2025[2] Chairman's Statement on Activist Strategy Chairman Carl C. Icahn reiterated his conviction in the activist investment strategy, highlighting its superior long-term returns despite occasional volatility from hedging activities. He noted that IEP's unique position allows it to capitalize on poorly managed public companies. The company has recently established new activist positions in American Electric Power (AEP) and JetBlue Airways (JBLU) - Since January 1, 2000, IEP's depositary units have returned approximately 1,066%, significantly outperforming the S&P 500 (436%), Dow Jones (491%), and Russell 2000 (453%) over the same period[1] - The core of the activist strategy is to target companies that are not well-run, as removing underperforming management is difficult and expensive for most investors[1] - New activist opportunities have been identified, including recently announced positions in American Electric Power Company, Inc. (AEP) and JetBlue Airways Corp. (JBLU)[1] - Short-term underperformance can occur when the hedge book's performance overwhelms long positions, but the expectation is for returns to revert to historical levels where long positions outperform hedges[3] Financial Performance For the full year 2023, IEP's revenue declined to $10.8 billion and its net loss widened to $684 million, largely due to losses from its investment funds' hedging activities. Total assets decreased significantly year-over-year. Despite the annual decline, Q4 2023 showed a year-over-year improvement in both net loss and Adjusted EBITDA Consolidated Statements of Operations IEP's revenue for FY 2023 was $10.8 billion, down from $14.1 billion in FY 2022. The net loss attributable to IEP expanded to $684 million ($1.75 per unit) in 2023 from $183 million ($0.57 per unit) in 2022. The decline was significantly impacted by a $1.575 billion net loss from investment activities. For Q4 2023, revenue was $2.7 billion and the net loss was $139 million, an improvement from a $255 million loss in Q4 2022 Full Year Performance (2023 vs. 2022) | Metric | 2023 | 2022 | | :--- | :--- | :--- | | Total Revenues | $10,847 million | $14,101 million | | Net Loss from Investment Activities | ($1,575 million) | ($168 million) | | Net Loss Attributable to IEP | ($684 million) | ($183 million) | | Diluted Loss per LP Unit | ($1.75) | ($0.57) | Fourth Quarter Performance (2023 vs. 2022) | Metric | Q4 2023 | Q4 2022 | | :--- | :--- | :--- | | Total Revenues | $2,677 million | $3,101 million | | Net Loss Attributable to IEP | ($139 million) | ($255 million) | | Diluted Loss per LP Unit | ($0.33) | ($0.74) | Consolidated Balance Sheets As of December 31, 2023, IEP's total assets stood at $20.9 billion, a significant decrease from $27.9 billion at the end of 2022. Total equity also declined to $6.1 billion from $9.6 billion over the same period. The reduction in assets was primarily driven by a decrease in the value of investments, amounts due from brokers, and securities sold, not yet purchased Key Balance Sheet Items (Year-End) | Metric | Dec 31, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | Total Assets | $20,858 million | $27,914 million | | Total Liabilities | $14,785 million | $18,356 million | | Total Equity | $6,073 million | $9,558 million | | Cash and cash equivalents | $2,951 million | $2,337 million | Indicative Net Asset Value (NAV) IEP's Indicative Net Asset Value (NAV) was $4.76 billion at the end of 2023, down from $5.64 billion at the end of 2022. The NAV is composed of market-valued subsidiaries like CVR Energy, other subsidiaries valued based on multiples, and the Holding Company's net assets. The decrease from Q3 2023 was mainly due to hedging losses and distributions Indicative Net Asset Value Trend (in millions) | Component | Dec 31, 2023 | Sep 30, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | :--- | | Indicative Gross Asset Value | $8,021 | $8,664 | $9,232 | | Holding Company Net Debt | ($3,263) | ($3,495) | ($3,589) | | Indicative Net Asset Value | $4,758 | $5,169 | $5,643 | - The decrease in NAV of $411 million from September 30, 2023, was primarily driven by losses from short positions in the investment funds (used for hedging) and distributions paid to unitholders[2][6] Non-GAAP Measures and Reconciliations Adjusted EBITDA attributable to IEP for FY 2023 was $361 million, a decrease from $679 million in FY 2022. However, Q4 2023 showed a positive Adjusted EBITDA of $9 million, a substantial turnaround from a loss of $75 million in Q4 2022. The company defines Adjusted EBITDA to exclude items like impairment, restructuring costs, and gains/losses on asset dispositions to better reflect core operating performance Adjusted EBITDA Attributable to IEP (in millions) | Period | 2023 | 2022 | | :--- | :--- | :--- | | Fourth Quarter | $9 | ($75) | | Full Year | $361 | $679 | - The company presents Adjusted EBITDA to provide supplemental information on core operating performance, excluding the effects of interest (except for the Investment segment), taxes, D&A, and other non-operational charges[17] Company and Disclosures Icahn Enterprises L.P. is a diversified holding company operating as a master limited partnership. Its subsidiaries are engaged in seven primary business segments. The report includes a standard forward-looking statements disclaimer, highlighting various risks that could affect future performance - IEP is a diversified holding company with subsidiaries in seven operating businesses: Investment, Energy, Automotive, Food Packaging, Real Estate, Home Fashion, and Pharma[9] - The release contains forward-looking statements subject to risks such as economic downturns, investment performance, geopolitical conflicts, and industry-specific challenges for its various segments[10]