Icahn Enterprises (IEP) Earnings Transcript

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DATE

Wednesday, February 25, 2026 at 10 a.m. ET

CALL PARTICIPANTS

• Chief Executive Officer — Andrew Teno
• Chief Financial Officer — Ted Papapostolou

TAKEAWAYS

• Net Asset Value (NAV) -- Decreased by $654,000,000 sequentially from fiscal Q3 2025 (period ended Sept. 30, 2025), due to offsetting between fund gains and share price declines at CVR Energy (NYSE:CVI).
• Fund Performance -- Up approximately 11% for the quarter including refining hedges and up approximately 9% excluding them, driven by EchoStar (NASDAQ:SATS), refining hedges, and Sentry (NASDAQ:SEN), with Caesars Entertainment (NASDAQ:CZR) as the primary detractor.
• Cash Position -- Fund cash at period-end was approximately $750,000,000, rising to over $1.2 billion subsequent to quarter end.
• Corporate Debt Reduction -- Actions taken after quarter end to reduce Icahn Enterprises corporate debt, including calling the remaining balance of 2026 maturities.
• Distribution -- Board declared an unchanged distribution of $0.50 per depositary unit.
• Energy Segment Adjusted EBITDA -- $51,000,000 for fiscal Q4 2025 (period ended Dec. 31, 2025), down from $99,000,000 in fiscal Q4 2024, attributed to low fertilizer plant utilization and downtime at the Coffeyville facility.
• Automotive Segment Revenue -- Automotive service revenues decreased by $1,000,000 year over year; same-store sales increased by 5% year over year.
• Real Estate Adjusted EBITDA -- Increased by $6,000,000 year over year, mostly from asset transfers; $9,000,000 attributed to intercompany income and $3,000,000 from third-party tenants.
• Food Packaging Adjusted EBITDA -- Decreased by $8,000,000 year over year, due to lower volume, higher manufacturing inefficiencies, and restructuring disruptions.
• Home Fashion Adjusted EBITDA -- Down $5,000,000 year over year, primarily driven by weaker demand in U.S. retail and hospitality.
• Pharma Adjusted EBITDA -- Decreased by $4,000,000 year over year, mainly from reduced sales in the anti-obesity market due to generic competition.
• Operating Subsidiary Liquidity -- Subsidiaries ended the quarter with $913,000,000 in cash and revolver availability.
• Funds’ Top Performing Positions -- EchoStar sold additional spectrum to SpaceX, receiving more SpaceX equity; Sentry saw base revenue and EBITDA growth of 25%-28% in fiscal Q3 2025 (period ended Sept. 30, 2025) and reduced leverage to mid 2x EBITDA through organic growth and an equity offering.
• AEP Investment Commentary -- Management cited American Electric Power (NASDAQ:AEP)’s $72,000,000,000 CapEx plan supporting projected asset base growth of 10% CAGR and EPS growth of 9% CAGR through 2030, with further upside possible.
• Southwest Gas Update -- Icahn Enterprises exited its Southwest Gas Holdings (NYSE:SWX) position after quarter end following operational improvements including the Great Basin Pipeline Expansion Project and enhanced balance sheet metrics.
• IFF Update -- International Flavors & Fragrances (NYSE:IFF) announced a formal sale process for its food ingredients business and gave 2026 guidance for mid-single-digit comparable EBITDA growth driven by portfolio optimization and innovation investment.
• Caesars Commentary -- Caesars Entertainment was removed from top five fund positions due to underperformance but is seen by management as undervalued, valued at an estimated 20% free cash flow yield with capital allocated to share repurchases and debt reduction.
• Pharma Pipeline -- TRANSCEND trial preparation for the PAH drug is on track, with first patient expected to be dosed within 60 to 90 days; “the physician community is excited by the potential for disease-modifying designation.”

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RISKS

• Energy segment’s adjusted EBITDA declined by $48,000,000 year over year, attributed to low fertilizer utilization and a three-week outage at Coffeyville’s air separation plant.
• Food Packaging performance was negatively affected by lower volume, higher production inefficiency, and restructuring-driven headwinds.
• Home Fashion segment faced demand softness in U.S. retail and hospitality, which contributed to lower adjusted EBITDA.
• Pharma experienced lower adjusted EBITDA linked to decreased sales from generic competition in the anti-obesity market.

SUMMARY

Icahn Enterprises (NASDAQ:IEP) reported a sequential NAV decline of $654,000,000, driven by a mix of strong fund gains and CVR Energy share price weakness. Fund performance was positive, with contributions from EchoStar, refining hedges, and Sentry, while Caesars Entertainment detracted from results. Post-quarter actions included a significant cash buildup in the funds, corporate debt reduction, and the declaration of an unchanged distribution. Segment performance varied, with year-over-year declines in Energy, Food Packaging, Home Fashion, and Pharma, while Real Estate adjusted EBITDA improved primarily due to internal asset transfers. Liquidity remains robust at both the parent and subsidiary levels, with strategic actions focused on capitalizing on select market opportunities.

• Management maintains a “slightly more cautious view” of market conditions, choosing to favor defensive investments and deploying a larger cash position strategically.
• Sentry achieved substantial base revenue and EBITDA growth, and its financial flexibility increased due to reduced leverage following a recent equity offering.
• EchoStar’s spectrum transaction with SpaceX further monetized portfolio assets and increased exposure to potential value creation tied to a possible SpaceX IPO.
• International Flavors & Fragrances initiated a sale process for its food ingredients segment and introduced 2026 EBITDA guidance, signaling focus on portfolio optimization and innovation-led growth.

INDUSTRY GLOSSARY

• RDU: Renewable Diesel Unit; a refining unit that processes bio-feedstocks into renewable diesel fuel.
• PAH: Pulmonary Arterial Hypertension; a condition targeted by a key drug candidate in Icahn Enterprises’ pharma pipeline.
• TRANSCEND trial: A clinical study evaluating Icahn Enterprises’ PAH drug, referenced as a pending milestone in the pharma segment.
• Capture rates: In refining, refers to the proportion of theoretical gross margin captured, as opposed to being lost due to operational or market inefficiencies.

Full Conference Call Transcript

I will now turn it over to Andrew Teno, our Chief Executive Officer.

Andrew Teno: Thank you, Rob, and good morning to everyone on today's call. Fourth quarter NAV decreased by $654,000,000 compared to the third quarter. The excellent performance in our funds, up approximately 11% for the quarter, was offset by share price declines in CVI. Regarding CVI, we do not believe there are any material changes to CVI's outlook. Rather, we remain optimistic on the medium-term refining outlook. The two positive factors are: one, limited capacity expansions globally; and two, multiple new pipeline projects that will move Mid-Con and Gulf Coast barrels to the West Coast, which should help improve regional profitability for CVI.

On a company-specific level, CVI is focused on improving its capture rates, which should drive improved profitability even if industry crack spreads remain constant.

Now turning to the funds. In the fourth quarter, we were up approximately 11% including refining hedges and up approximately 9% excluding refining hedges. The big contributors for the quarter were EchoStar, the refining hedges, and Sentry. Our lone big detractor was Caesars. For the year, we are about flat including refining hedges and up 7% excluding refining hedges.

In terms of our top positions, AEP is an electric utility that is benefiting from the AI infrastructure buildout and a new world-class management team. During their third quarter call, AEP disclosed a new $72,000,000,000 CapEx plan that would drive its asset base to grow at a 10% CAGR and its earnings per share to grow at a 9% CAGR through 2030. Already, after only a few months, the company is seeing opportunities to add an additional $5,000,000,000 to $8,000,000,000 of projects that would further grow its asset base and earnings per share. Southwest Gas is a gas utility that we exited subsequent to the quarter.

I am proud of the work that we did in collaboration with the Board and management team. The company is in a much better position today than when we first invested given the Great Basin Pipeline Expansion Project, path to improve return on equity, and best-in-class balance sheet.

Turning to EchoStar. The company sold additional spectrum to SpaceX in exchange for additional SpaceX common equity, further demonstrating the value of EchoStar's spectrum portfolio. We believe meaningful upside remains and that the IPO of SpaceX could serve as a meaningful positive catalyst. Sentry, a utility infrastructure services firm, is firing on all cylinders, reporting base revenue and EBITDA growth of 25–28% in Q3. The combination of the organic growth and a recent equity offering has led to leverage declining to mid 2x EBITDA, giving the company significant financial flexibility, further enabling it to continue capturing the tremendous growth in energy infrastructure investment. IFF is a high-quality consumer staple company where the refreshed management team continues to impress.

IFF announced a formal sale process for its food ingredients business and gave 2026 guidance for mid-single-digit comparable EBITDA growth as portfolio optimization and investment in product innovation drive volume growth and performance. One name that fell off the top five list is Caesars, where the stock has underperformed our expectations. We continue to believe that Caesars is undervalued given the significant owned real estate portfolio and the growing digital business powered by iCasino. Using consensus estimates, Caesars trades at approximately a 20% free cash flow yield, which is expected to be used to repurchase shares and pay down debt.

If I step back and speak a bit more broadly, we are taking a slightly more cautious view of the market. With all the wild swings in sectors that are deemed at risk of AI, we are happy to be in defensive names that should benefit from the AI buildout with a significant war chest to take advantage of opportunities as they arise. As of year-end, we had approximately $750,000,000 in cash at the funds. More recently, our cash balance at the funds has increased and is greater than $1.2 billion. Subsequent to the quarter end, we have taken steps to reduce our IEP corporate debt balance, and we called in the remaining balance of the 2026 maturities.

Lastly, the Board declared an unchanged distribution at $0.50 per depositary unit. I will now pass it to Ted to talk about our controlled businesses.

Ted Papapostolou: Thank you, Andrew. Energy segment's adjusted EBITDA was $51,000,000 for Q4 2025 compared to $99,000,000 in Q4 2024. The fertilizer business was negatively impacted by low utilization caused by the turnaround at the Coffeyville fertilizer facility and a three-week downtime event caused by the facility's third-party air separation plant. During December, CVI completed the reversion of the RDU at the Wynnewood refinery back to hydrocarbon processing.

And now turning to our automotive segment. Q4 2025 automotive service revenues decreased by $1,000,000 compared to the prior year quarter. Same-store sales paint a better picture, having increased by 5% as compared to the prior year quarter. We are pleased with this positive revenue trajectory, but there is still a lot more work to be done. We continue to focus our efforts on product, pricing, labor, and distribution strategy.

Now turning to our other operating segments. Real Estate's Q4 2025 adjusted EBITDA increased by $6,000,000 compared to the prior year quarter. The increase is primarily driven by income from the assets that were transferred from the auto segment, of which $9,000,000 is intercompany income from the auto segment and $3,000,000 from third-party tenants. Food Packaging's adjusted EBITDA decreased by $8,000,000 for Q4 2025 as compared to the prior year quarter. The decrease is primarily due to lower volume, higher manufacturing inefficiencies, and disruptive headwinds from the restructuring plan.

During Q4, we made a change to the CEO position and brought back Tom Davis, who was the CEO of this case previously and has a successful track record with the company. With his knowledge of the industry and the business, we feel he is the right person to lead this case through this transformative period. Home Fashion's adjusted EBITDA decreased by $5,000,000 when compared to the prior year quarter, primarily due to softening demand in our U.S. retail and hospitality business. The tariff uncertainty has created opportunity for the company as new business has entered into the bidding pipeline, and we are hopeful this will have a positive impact for the segment in 2026.

Pharma's adjusted EBITDA decreased by $4,000,000 when compared to the prior year quarter, primarily due to reduced sales resulting from the generic competition in the anti-obesity market. The TRANSCEND trial preparation for our PAH drug is on schedule, and the first patient will be dosed in the next 60 to 90 days. The physician community is excited by the potential for disease-modifying designation.

And now turning to our liquidity. We maintain liquidity at the holding company and at 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, and our subsidiaries had cash and revolver availability of $913,000,000. 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? Thank you so much.

Operator: And as a reminder, to ask a question, press *11 on your telephone and wait for your name to be announced. To remove yourself, press 11 again. Again, that is *11 if you have a question. All right. Thank you so much. This concludes our Q&A. I will pass it back to Andrew Teno for final comments.

Andrew Teno: Right. Well, thank you, everyone, for joining today's call, and we will speak to you next quarter.

Operator: Thank you. And this concludes our conference. Thank you for participating, and you may now disconnect.

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