Icahn Enterprises(US:IEP)2021-11-02 22:22Financial Data and Key Metrics Changes - For the nine months ended September 30, 2021, indicative net asset value increased by $1.8 billion to $5.4 billion compared to $3.6 billion as of December 31, 2020 [17] - Net income improved by $566 million over the prior year period with a net loss attributable to Icahn Enterprises of $148 million or $0.55 per LP unit, compared to a net loss of $714 million or $3.14 per LP unit in the prior year period [18] - Adjusted EBITDA for Q3 2021 improved by $638 million to $88 million compared to a loss of $550 million in Q3 of 2020 [19] Business Line Data and Key Metrics Changes - Energy segment reported net sales of $1.9 billion for Q3 2021, compared to $1 billion in the prior year period, with consolidated adjusted EBITDA of $243 million for Q3 2021, compared to a loss of $39 million in Q3 2020 [37] - Automotive segment's Q3 2021 adjusted EBITDA was $14 million compared to $6 million in the prior year period, driven by improved operations and gross margins [40] - Food Packaging segment's net sales decreased by $1 million or approximately 1%, with adjusted EBITDA attributable to Icahn Enterprises at $11 million for Q3 2021, compared to $12 million for Q3 2020 [43] Market Data and Key Metrics Changes - The investment funds had a positive return of 8.8% year-to-date Q3, with a slightly negative return of 1.8% for Q3 2021, significantly improved from negative returns of 18.8% and 11.8% in the comparable prior year periods [34] - CVR Partners reported Q3 2021 EBITDA of $64 million, compared to $15 million for Q3 2020, driven by higher crop prices and tight fertilizer supplies [39] Company Strategy and Development Direction - The company is focusing on an activist strategy, highlighted by the tender offer to acquire Southwest Gas Holdings for $75 a share, reflecting a long track record of activism [9][10] - The company intends to be at the forefront of the green revolution with investments in renewable fuels, including a planned conversion of the Wynnewood refinery to renewable diesel production [22][23] - The Automotive segment is positioned for consolidation in a fragmented industry, with over 50% of the market made up of smaller chains and independent operators [27] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by the COVID-19 pandemic and the need for strategic flexibility, with a focus on maintaining ample liquidity to capitalize on opportunities [49][50] - The company expects pricing adjustments in the Food Packaging segment to align with rising raw material and distribution costs, anticipating a recovery in pricing through Q4 and into 2022 [82] Other Important Information - The company declared a $2 quarterly distribution payable in cash or additional units, representing an annual yield of almost 14% [12] - The company closed the quarter with holding company cash and investments in the funds of $5.9 billion, providing significant strategic flexibility [30] Q&A Session Summary Question: Differentiation in the hedging strategy - Management explained that the current strategy is more formulaic, focusing on single names and industry hedges rather than broad market hedges as in 2020 [52] Question: Update on Auto segment and real estate optimization - Management indicated that there are approximately 56 properties remaining to lease out from a total of 216, with ongoing efforts to fill vacancies [55] Question: Short exposure breakdown in the investment portfolio - Management provided details on the current short exposure, indicating about 9% long in equities and about 20% short in credit [59] Question: Cash deployment at the holding company - Management clarified that a notable item in Q3 was the removal of an external facility at the Automotive Group, which was replaced with internal cash [66] Question: Proceeds from the PSC Metals sale - Management estimated net proceeds from the sale to be in the range of $300 million to $310 million, with minimal tax leakage expected [71][73] Question: Sales decrease in the Food Packaging segment - Management attributed the decrease to a maintenance issue and a lack of the COVID-related volume bump experienced in the previous year [80]