Icahn Enterprises L.P. Q1 2026 Earnings Call - NAV Up on CVI Gains, Refining Hedges Drag Results
Summary
Leadership changed midstream, but the balance sheet did not. New CEO Ted Papapostolou and incoming CFO Robert Flint inherit a portfolio that posted a $201 million NAV gain for the quarter, driven largely by a $605 million increase in the long position in CVI, while heavy losses on refining hedges turned an otherwise constructive investment-quarter into a headline net loss. The funds were positive excluding hedges, but the hedge program and a jump in net short exposure amplified volatility and produced a consolidated loss for the quarter.
Liquidity is ample, and management is signaling optionality. Holding company cash and investments sit at $2.8 billion, subsidiaries have $1.3 billion of cash and revolver availability, and the funds hold about $782 million in cash. Management highlighted several potential catalysts, from a $0.10 CVI dividend to an upcoming pharma trial and possible upside at EchoStar tied to the SpaceX IPO, while keeping the quarterly distribution unchanged at $0.50 per unit.
Key Takeaways
- Management transition: Ted Papapostolou named CEO, Robert Flint elevated to CFO, Andrew Teno stepped down; Carl Icahn remains central to strategy and oversight.
- Indicative NAV rose $201 million versus year-end, primarily driven by a $605 million increase in the long position in CVI.
- CVI was the quarter's largest positive driver, management cited geopolitical volatility as creating attractive opportunities, and CVI announced a $0.10 dividend.
- Refining hedges produced large mark-to-market losses that materially weighed on consolidated results, cited as approximately $320 million by management and $425 million in consolidated results by the accounting team.
- Reported net loss attributable to IEP was $459 million, or a loss of $0.71 per unit, while Q1 Adjusted EBITDA loss attributable to IEP was $216 million versus a loss of $228 million in the prior-year quarter.
- Investment funds returned +4.4% for the quarter excluding refining hedges, but including those hedges the funds delivered a negative return of 8.2%.
- Net short notional exposure of the funds rose to 29% at quarter end, up from a net short of 13% at year-end; excluding refining hedges, net short notional exposure was 2% versus a 19% net long at year-end.
- Liquidity profile strong: holding company cash and investment in the funds of $2.8 billion, subsidiaries with $1.3 billion of cash and revolver availability, approximately $782 million in cash at the funds, and approximately $2.2 billion invested by the funds.
- Distribution unchanged at $0.50 per depository unit, signaling steady capital return policy despite the quarterly loss.
- Portfolio company snapshots: AEP up ~14% in Q1 after raising long-term growth targets; Century posted strong Q4 base revenue and gross profit growth and guided to double-digit growth for 2026; IFF continued portfolio optimization with divestitures; Caesars showed Vegas stabilization and digital EBITDA growth of 61%.
- Energy operations: refining utilization was robust at 97%, but margins were pressured by higher RFS obligations and unrealized derivative losses; fertilizer performed strongly on spring demand.
- Automotive segment: service revenues declined by $9 million year-over-year due to store closures, while same-store sales rose about 2%; management is focused on product, pricing, labor, and distribution improvements.
- Other segments: Real Estate Adjusted EBITDA rose $18 million driven by asset transfers from Automotive, Food Packaging and Home Fashion posted EBITDA declines, and Pharma adjusted EBITDA fell by $10 million amid generic competition and higher R&D spend.
- Pharma update and near-term catalyst: TRANSCEND trial prep for the PAH drug is on schedule, with first patient dosing expected in 60 to 90 days; management describes physician interest in a potential disease-modifying designation.
Full Transcript
Operator: Good morning, and welcome to the Icahn Enterprises L.P. first quarter 2026 earnings call with Andrew Teno, President and CEO, Ted Papapostolou, Chief Financial Officer, Robert Flint, Chief Accounting Officer, and Joseph Pacetti, Director of SEC Reporting. I would now like to hand the call over to Joseph Pacetti, who will read the opening statement.
Joseph Pacetti, Director of SEC Reporting, Icahn Enterprises L.P.: 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 expected future business and financial performance of Icahn Enterprises L.P. 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.
Ted Papapostolou, Chief Financial Officer / CEO (Incoming), Icahn Enterprises L.P.: 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 Teno.
Andrew Teno, President and CEO (Outgoing), Icahn Enterprises L.P.: Thank you, Joe. Good morning, everyone. I wanted to say thank you to everyone who I’ve worked with over the past few years, both before becoming CEO and after. It is an honor and privilege to work with and learn from the living legend of activism and our chairman, Carl Icahn. Over the past few years, we have worked hard to high-grade the investment fund portfolio and to get our controlled operations moving in the right direction. I leave the company knowing that it’s in good hands with a significant war chest to take advantage of opportunities as they arise. It’s been a pleasure and honor. With that, I will hand it over to Ted, our new CEO. Congratulations, Ted.
Ted Papapostolou, Chief Financial Officer / CEO (Incoming), Icahn Enterprises L.P.: Thank you, Andrew. Before turning to the work ahead, I want to begin by thanking Andrew for his leadership and service to Icahn Enterprises and wish him continued success in his next chapter. I am honored to take on the role of CEO and excited by the opportunity ahead. Icahn Enterprises has a unique portfolio, a strong heritage of disciplined capital allocation, and a culture of accountability and long-term thinking. I look forward to building on that foundation, working closely with Carl and our board to continue strengthening the enterprise and executing on our priorities. I also look forward to working with Rob in his new role as CFO. With that, let’s get into the results. First quarter NAV increased by $201 million compared to year-end.
The increase was primarily driven by an increase of $605 million in our long position in CVI, which was offset in part by losses on refining hedges of $320 million in our investment segment, also known as the funds. Regarding CVI, major geopolitical events drove volatility, which has set up attractive market opportunities for the balance of 2026. We believe CVI is well-positioned to allow for potential future debt reductions and capital returns to shareholders. We are pleased with CVI’s announcement of a $0.10 dividend. For Q1, the investment segment was up approximately 4%, excluding the refining hedges. In terms of our top positions, AEP is an electric utility that benefits from the AI infrastructure build.
In the first quarter, the company reaffirmed its 2026 operating EPS outlook and increased its long-term operating earnings CAGR to greater than 9%, supported by 63 gigawatt of incremental contracted load and 11% rate base growth through 2030. AEP stock was up approximately 14% for Q1. Century reported strong base revenue and gross profit growth of 28% and 50% in Q4. The company also guided to strong double-digit base revenue and gross profit growth for 2026 as it continues to capture the tremendous tailwinds from increased energy infrastructure investment. The stock was up approximately 16% for Q1. IFF continues to execute on its portfolio optimization, running a sale process for its food ingredients business and announcing the completion of its divestiture of the soy crush business. IFF stock was up approximately 8% for Q1.
Caesars reported solid Q1 results, with Vegas stabilizing, regional sales growing in the low single digits, and digital posting strong EBITDA growth of 61%. Caesars is expected to generate significant cash flow in 2026, which we hope to fund meaningful share repurchases and debt paydown. Caesars stock was up approximately 13% for Q1. EchoStar lowered its total expected tax and decommissioning costs related to its divested assets, which we believe meaningful upside remains for the position, with the IPO of SpaceX potentially serving as a material positive catalyst. EchoStar stock was up approximately 8% for Q1. As of quarter end, we had approximately $782 million in cash at the funds. Lastly, the board declared an unchanged distribution at $0.50 per depository unit. I will now pass it to Rob to discuss our financial results.
Robert Flint, Chief Accounting Officer / Chief Financial Officer, Icahn Enterprises L.P.: Thank you, Ted. For the first quarter of 2026, net loss attributable to IEP was $459 million or a loss of $0.71 per unit. Our first quarter consolidated results include $425 million of losses on refining hedges in our investment segment and $158 million of unrealized derivative losses in our energy segment. Q1 2026 Adjusted EBITDA loss attributable to IEP was $216 million compared to Adjusted EBITDA loss attributable to IEP of $228 million for the prior year quarter. I will now provide more detail regarding the performance of our individual segments. The investment funds had a positive return of 4.4% for the quarter, excluding refining hedges. Including the refining hedges, the funds had a negative return of 8.2% for the quarter.
Long and other positions had a net positive performance attribution of 4.1%, and short positions had a negative performance attribution of 12.9%. The investment funds had a net short notional exposure of 29% at the end of the quarter, compared to net short of 13% at year-end. Excluding our refining hedges, the funds had a net short notional exposure of 2% as of quarter end, compared to net long of 19% at year-end. Our investment of the funds was approximately $2.2 billion as of quarter end. Moving to our energy segment. Energy segment Adjusted EBITDA attributable to IEP was negative $5 million for Q1 2026, compared to negative $6 million for Q1 2025.
The first quarter refining operations were solid with crude utilization of 97%, although margins were weighed down by higher RFS obligation costs and unrealized derivative losses. The fertilizer segment had strong results driven by robust demand for the spring planting season. We believe that CVI’s assets are well-positioned to benefit from the global tightness in refined product and nitrogen fertilizer. Now turning to our automotive segment. Q1 2026 automotive service revenues decreased by $9 million compared to the prior year quarter, primarily driven by the closure of stores during the balance of 2025, offset in part by increased price. Same store sales paints a better picture, having increased by approximately 2% as compared to the prior year quarter. We are pleased with this positive revenue trajectory, but there’s still a lot more work to be done.
We continue to focus our efforts on product, pricing, labor, and distribution strategy. Turning to all other operating segments. Real Estate’s Q1 2026 Adjusted EBITDA increased by $18 million compared to the prior-year quarter. The increase is primarily driven by income from the assets that were transferred from the Automotive segment, of which $9 million is intercompany income from the Automotive segment and $2 million from third-party tenants. Food Packaging’s Adjusted EBITDA attributable to IEP decreased by $6 million for Q1 2026 as compared to the prior-year quarter. The decrease is primarily due to lower volume and disruptive headwinds from the restructuring plan. Home Fashion’s Adjusted EBITDA decreased by $2 million when compared to the prior-year quarter, primarily due to softening demand in retail and hospitality business and supply chain disruptions in the Strait of Hormuz.
Pharma’s adjusted EBITDA decreased by $10 million when compared to the prior year quarter, primarily due to reduced sales resulting from generic competition in the anti-obesity market and increased R&D expenses related to our ongoing pivotal drug trials. 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 remains excited by the potential for a disease-modifying designation. 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 $2.8 billion, and our subsidiaries had cash and revolver availability of $1.3 billion.
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 the call for questions?
Operator: Thank you. As a reminder, to ask a question simply press star one one on your telephone and wait for your name to be announced. To remove yourself, press star one one again. One moment please. As I see no questions in the queue, I will pass it back to Ted Papapostolou for closing comments.
Ted Papapostolou, Chief Financial Officer / CEO (Incoming), Icahn Enterprises L.P.: Thank you, everyone, and looking forward to our next update call.
Operator: Concludes our conference. Thank you for participating, and you may now disconnect.
