Icahn Enterprises (IEP) Q3 2026 Earnings Call: Energy Gains, Hedge Losses and CVR Deal

Key Takeaways

• Icahn Enterprises L.P. (IEP) reported a Q3 2026 net loss attributable to IEP of $225 million, or $0.31 per unit, compared with net income of $287 million, or $0.49 per unit, in Q3 2025.
• Adjusted EBITDA attributable to IEP was a loss of $214 million, versus positive adjusted EBITDA of $75 million in the prior-year quarter.
• The investment funds returned negative 31.3% including refining hedges. Refining hedge losses reduced indicative net asset value by $522 million.
• Energy segment adjusted EBITDA attributable to IEP increased to $404 million from $98 million, supported by strong refining operations and record Mid-Continent crack spreads.
• Indicative net asset value increased by $865 million from Q2, mainly reflecting a $1.7 billion increase in the value of IEP’s long position in CVR Energy (CVI), partly offset by refining hedge losses.
• The board maintained the quarterly distribution at $0.50 per depositary unit. Holding-company cash and investments in the funds totaled $2.3 billion at quarter-end.

Key Financial Data

Business and Operating Performance

Investment

The investment funds generated a negative return of 5.5% before refining hedges and negative 31.3% including those hedges. Long positions contributed negative 7.8%, while short positions contributed negative 24.3%.

The funds’ net short notional exposure narrowed to 7% at quarter-end from 30% at the end of Q2. Excluding refining hedges, net long exposure increased to 57% from 23%. IEP’s investment in the funds was approximately $1.4 billion, including about $334 million in cash.

Among major positions, Century reported double-digit growth in pipeline and sales, but its shares declined approximately 34% during Q3. IFF shares increased approximately 5% as the company advanced its plan, announced the sale of its food ingredients business and authorized an enhanced $2.5 billion share repurchase program. Caesars reported continued positive performance in its regional and digital operations.

Energy

Energy was IEP’s strongest operating segment in the quarter. Adjusted EBITDA attributable to IEP rose by $306 million year over year to $404 million. Management attributed the result to strong refining operations and record Mid-Continent crack spreads.

The Wynnewood refinery received a 100% small refinery waiver. Fertilizer results were negatively affected by the East Dubuque turnaround, although the facility has returned to service. Management said the business is positioned to benefit from tight nitrogen supplies and the fall ammonia application season.

CVR Energy announced a $4.2 billion acquisition of refineries and a marketing platform at a purchase price below 3.5 times management’s estimate of 2026 EBITDA. Management said the transaction would have increased EBITDA by more than $1 billion and EPS by over 105% on a pro forma basis.

IEP committed to a $500 million backstop, which will be reduced dollar for dollar by CVR Energy’s announced equity offering. Management said it does not expect the backstop commitment to be required.

Automotive and Real Estate

IEP completed the sale of Pep Boys on August 19, receiving $645 million and recording a $215 million pretax gain. Automotive service revenue declined by $175 million year over year, primarily because of the divestiture. Revenue from retained automotive operations, mainly franchise royalty income, was flat from the prior quarter.

Real Estate adjusted EBITDA increased by $11 million year over year. The segment assumed certain operating leases previously held by Automotive, including supercenter properties with space occupied by Pep Boys, other tenants or currently vacant. Management plans to lease the vacant space to improve future cash flow and operating results.

Other Operating Segments

Food Packaging adjusted EBITDA attributable to IEP increased by $2 million, reflecting higher volumes and improved pricing and product mix from reduced waste.

Home Fashion adjusted EBITDA was unchanged despite softer hospitality demand and continued supply-chain disruptions in the Strait of Hormuz.

Pharma adjusted EBITDA decreased by $4 million due to lower sales caused by generic competition in anti-obesity drug therapy and higher research and development spending for pivotal trials. Preparation for the TRANSCEND trial for the company’s PAH drug remained on schedule, with four sites active and patient screening underway.

Management Outlook

Management said October began positively, with indicative net asset value increasing due to a $525 million rise in CVR Energy and an approximately $60 million increase from the investment funds.

The company expects the acquired refining and marketing assets to generate substantial cash flow under the current refining environment. IEP also expects to address its senior notes maturing in May 2027 in the coming months. The notes become callable at par beginning November 15, and management said its liquidity provides flexibility over the timing and method used.

Risks and Areas to Watch

Investment performance remained volatile, particularly due to refining hedges and short positions. Refining hedge losses reduced indicative net asset value by $522 million during Q3.

Other disclosed operating pressures included the East Dubuque fertilizer turnaround, soft hospitality demand, Strait of Hormuz supply-chain disruptions, generic competition affecting Pharma sales and higher clinical-trial expenses.

IEP also has a potential $500 million backstop commitment related to CVR Energy’s acquisition, although management expects the announced equity offering to reduce the commitment and does not anticipate it will be needed.

Full Earnings Call Transcript

Complete Earnings Call Transcript

Management Remarks

Operator

Good morning, and welcome to the Ian Enterprises LP Third Quarter 2026 Earnings Call with Ted Papastolo, President and CEO; Robert Slant, Chief Financial Officer; and Joseph Passeri, Director of SEC Reporting.

I would now like to hand the call over to Joseph Passeri, who will read the opening statement.

Joseph Passeri

Thank you, operator. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements we make in this presentation and 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 are 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 in the back of this presentation.

We also present indicative net asset value. Indicative net asset value includes, among other things, changes in fair value of certain subsidiaries, which are not included in our GAAP earnings.

All net income and EBITDA amounts we discussed are attributable to Icon enterprises unless otherwise specified. I'll now turn it over to Ted.

Ted Papapostolou

Thank you, Joe. Increased by $865 million compared to Q2 and -- the increase was primarily driven by a $1.7 billion increase in the value of our long position in our subsidiary, CVI, partially offset by a $522 million decrease related to losses on refining hedges within our funds.

The month of October has started Q4 positively with NAV increasing as a result of a $525 million increase in CVI and approximately $60 million increase from the funds.

CVI announced a transformative $4.2 billion acquisition of refineries and a marketing platform at a purchase price of less than 3.5x management's estimate of 2026 EBITDA.

For the months ended September 30, 2026, the transaction would have increased CVR's EBITDA by over $1 billion and increased EPS by more than 105% on a pro forma basis.

We believe the transaction is highly accretive and adds to strong cash-generating assets at an attractive valuation. In the current favorable refining environment, we expect these assets to generate substantial cash flow over the next months and beyond.

IAP strongly supports the transaction and has committed to provide a $500 million backstop which will be reduced dollar for dollar by the CVI equity offering announced earlier today.

As a result, we do not expect that our commitment will be needed. Separately, as part of the broader strategy, the CVI secondary equity transaction announced earlier today is intended to increase the liquidity and trading volume of CVI shares while providing additional liquidity to IEP.

We have senior notes maturing in May of 2027 and they become callable at par beginning November 15. We expect to address these notes in the coming months as we continue to evaluate the most effective use of our liquidity. With liquidity across our cash and investment in the funds, we have significant flexibility in how and when we address these notes.

The Board declared an unchanged distribution of $0.50 per depository unit. Turning to our top positions in our Investment segment. Century reported strong double-digit growth in both pipeline and sales in. The stock was down approximately 34% for Q3.

IFF continued to execute on its plan and announced the sale of its food ingredients business. The company also authorized an enhanced $2.5 billion share repurchase program. IFF shares increased approximately 5% during Q3. Caesars reported Q3 results with continued positive performance in its regional and digital businesses.

Caesars shares declined approximately during. I will now pass it to Rob to talk about the financial results.

Robert Flint

Thank you, Ted. For the third quarter of 2026, net loss attributable to IEP was $225 million or a loss of $0.31 per unit.

Net income attributable to IEP was $287 million or income of $0.49 per unit in the prior year quarter. Q3 '26 adjusted EBITDA loss attributable to IEP was $214 million compared to adjusted EBITDA attributable to IEP of $75 million for the prior year quarter. I'll now provide more detail regarding the performance of our individual segments.

The investment funds had a negative return of 5.5% for the quarter, excluding the refining hedges. Including the refining hedges, the funds had a negative return of 31.3% for the quarter.

Long positions had a net negative performance attribution of 7.8% and short positions had a negative performance attribution of 24.3%. The funds had a net short notional exposure of 7% at quarter end compared to net short of 30% as of prior quarter end.

Excluding our refining hedges, the funds had a net long notional exposure of 57% as of quarter end compared to net long of 23% as of prior quarter end.

Our investment in the funds was approximately $1.4 billion as of quarter end and had approximately $334 million in cash. Moving to our Energy segment. Energy segment adjusted EBITDA attributable to IEP was $404 million for Q3 '26 compared to $98 million in Q3 '25 or CBR recognized record earnings for the second quarter, driven by strong refining operations and record crack spreads in the Mid-Con.

We were pleased with the 100% small refinery waiver received at the Wynnewood refinery during the quarter. The fertilizer business results were negatively impacted by the East DB turnaround, but with the facility back online, they're now positioned to benefit from tight nitrogen supplies and the fall ammonia application season.

We are pleased with CBR's announcement of a $0.10 dividend and continue to believe that CBI's assets are well positioned to benefit from global tightness in refined product and nitrogen fertilizer.

Now turning to our Automotive segment. During Q3 '26, we closed on the sale of Pep Boys and received $645 million in proceeds and recognized a pretax gain of $215 million.

For the quarter, Automotive segment includes Pep Boys operating results through the closing date of August 19. Q3 '26 automotive service revenues decreased by $175 million compared to the prior year quarter. primarily as a result of the sale of Pep Boys.

Revenue from the retained automotive businesses, which primarily comprised of royalty income from the franchising businesses was flat in comparison to the prior quarter.

Now turning to all other operating segments. Real Estate's Q3 '26 adjusted EBITDA increased by $11 million compared to the prior year quarter. The increase is primarily driven by income from the assets that were transferred from the automotive segment.

During the quarter, in connection with the sale of Pep Boys, the Real Estate segment assumed certain operating leases previously held in the Automotive segment. The majority of these assumed leases or supercenter leases where Pep Boys occupied a portion of the space and the remaining space is either occupied by other tenants or is currently vacant.

The Real Estate segment will continue leasing up vacant space, which would improve cash flows and results going forward. Food Packaging's adjusted EBITDA attributable to IEP increased by $2 million for Q3 '26 as compared to the prior year quarter.

The increase is primarily due to volume-related increases and an increase in price and product mix driven by reduced waste. Home Fashion's adjusted EBITDA remained consistent when compared to the prior year quarter, despite softening demand in our hospitality business and continued supply chain disruptions in the Strait of Hormuz. Pharma's adjusted EBITDA decreased by $4 million when compared to the prior year quarter, primarily due to reduced sales resulting from generic competition in our anti-obesity drug therapy and increased R&D expenses related to our ongoing pivotal drug trials.

The TRANSCEND trial preparation for our PAH drug remains on schedule with 4 sites active and patient screening underway. 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 $2.3 billion and our subsidiaries had cash and revolver availability of $582 million.

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. This concludes our presentation of third quarter results, and we look forward to our update next quarter. Thank you.