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DATE
Monday, August 4, 2025 at 2:00 p.m. ET
CALL PARTICIPANTS
Chief Executive Officer — Andrew Teno
Chief Financial Officer — Ted Papapostolou
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TAKEAWAYS
NAV Increase: Net asset value rose by $252 million, primarily due to gains in CVI shares, partially offset by declines in automotive services.
CVI Share Performance: CVI share price increased by 38% from the first quarter, and additional share purchases totaled $32 million.
Fund Performance: Investment funds returned approximately -0.5%; excluding refining hedges, the return would have been a positive 2%.
Energy Segment EBITDA: EBITDA was negative $24 million, impacted by RINs mark-to-market and lower throughput; it was $103 million in the prior-year quarter.
Automotive Revenue Trend: Auto service revenue, after falling 5% in the first quarter, grew 1% in both May and June and is forecast to accelerate in July.
Auto Service Closures and Openings: 22 underperforming automotive locations were closed (44 year-to-date), with 16 new greenfield sites planned by year-end.
Pharma Segment Trial Initiation: A pivotal trial was approved for VI-0106 targeting PAH; the first update is expected in 12-18 months.
Liquidity: The holding company ended the quarter with $1.1 billion in cash and cash equivalents, and $700 million was held at the funds.
Quarterly Distribution: The board maintained the quarterly distribution at $0.50 per depositary unit.
Fund Net Long Position: The funds ended the quarter approximately 2% net long; adjusting for refining hedges results in a 23% net long position.
Caesars Digital Segment: Caesars digital business achieved 24% revenue growth and 100% EBITDA growth.
Real Estate Activity: Adjusted EBITDA for Real Estate decreased by $2 million; one country club was sold, with proceeds targeted for reinvestment in a new Pinehurst club.
Food Packaging Segment: Adjusted EBITDA declined by $9 million, attributed to volume, inefficiencies, and restructuring transition.
Home Fashion and Farmers: Both segments posted flat adjusted EBITDA compared to the prior-year quarter.
Total Holding Company Liquidity: Combined holding company cash and investment in funds stood at $3.5 billion; subsidiaries held $1.1 billion in cash and revolver availability.
SUMMARY
Icahn Enterprises L.P.(IEP 0.02%) reported no further planned refinery turnarounds through 2026, which may positively affect future cash flow stability. The announced CEO transition at CVI will elevate Mark Pytosh, a current executive, as Dave Lamp retires at year-end. The company highlighted its expectation for regulatory or legal developments related to an outstanding $548 million RINs liability, dependent on changes in government policy. The pivotal VI-0106 pharma trial has been approved to commence and will enroll 300 patients, with the first update expected in approximately 12 to 18 months. Real estate strategy now includes replicating a monetization playbook in new markets with recycled capital from disposed assets.
Chief Executive Officer Teno stated, "We believe our asset is unique, and the FDA will evaluate the potential of this drug to be disease-modifying," in reference to the VIVUS PAH asset.
The company attributed the decrease in holding company cash largely to interest and distribution payments, with only a partial impact from investment in CVI shares.
Management emphasized attractive long-term investment opportunities in regulated utilities and digital gaming.
There are no further planned refinery turnarounds or major outages scheduled through 2026, as explicitly confirmed by management.
INDUSTRY GLOSSARY
RINs (Renewable Identification Numbers): Government-issued credits that track renewable fuel production and are used by refiners to demonstrate EPA compliance under the Renewable Fuel Standard.
Crack Spread: The price difference between refined petroleum products and crude oil, serving as a margin indicator for refineries.
Greenfield Pipeline: Expansion plan involving new locations or facilities in previously undeveloped markets, rather than expanding existing operations.
PAH (Pulmonary Arterial Hypertension): A form of high blood pressure affecting arteries in the lungs and heart, referenced regarding pharmaceutical trial development.
EBITDA: Earnings before interest, taxes, depreciation, and amortization, used to assess operating profitability.
Net Long: An investment portfolio position in which the value of long holdings exceeds the value of short positions.
Full Conference Call Transcript
Andrew Teno, our Chief Executive Officer.
Andrew Teno: Thank you, Rob, and good morning, everyone. NAV increased $252 million from the first quarter driven primarily by positive performance in CVI, offset by decreases, in this case, in auto service. CVI share price increased by 38%, which when combined with additional share purchases of $32 million, led to an increase of $561 million from the first quarter. Crack spreads have improved, especially diesel cracks. We have no more planned turnarounds in 2025 and 2026. This enhanced cash flow profile has led to CVI recently paying down $90 million of its previously issued term loan.
Regarding RINs, we remain hopeful that the new administration may lead to the resolution of our outstanding litigation regarding small refinery exemptions, which has the potential to remove the $548 million liability that was recorded as of 2025 and potentially provide clarity to future years. We also announced that CVI's CEO, Dave Lamp, would be retiring as of year-end. His replacement, Mark Pytosh, is an internal promotion who has been the CEO of the fertilizer business and also led CVI's midstream efforts for the past few years. The investment funds ended down approximately 0.5% for the quarter, primarily driven by gains in our consumer cyclical sector offset by our broad market and refining hedges.
Excluding the refining hedges, fund performance would have been a positive return of 2%. Our auto service division remains a turnaround story. We are encouraged by the change in top-line revenue. After seeing first-quarter auto service revenue down 5% year-over-year, we saw revenue improve to 1% growth in both May and June, and it will accelerate further in July. In our pharma segment, we have approved the initiation of VIVUS' pivotal trial for the pulmonary arterial hypertension or PAH asset VI-0106.
In short, this drug is meant to serve patients with advanced PAH who struggle to breathe, provide oxygen to the blood, and maintain mobility and/or quality of life given a restriction of blood flow in their arteries leaving the heart to the lungs. Currently, there are multiple alternative treatments in the market. The latest treatment is marketed under the name Winravir. With any current PAH treatment, the patient may still require a lung transplant and/or heart transplant, which will not address the underlying cause of PAH. We believe our asset is unique, and the FDA will evaluate the potential of this drug to be disease-modifying. The trial will enroll 300 patients and includes unique analyses and clinical endpoints.
As the trial progresses, we will provide updates with the first one expected in approximately twelve to eighteen months from now. We ended the quarter with $1.1 billion of cash and cash equivalents at the holding company and an additional $700 million of cash at the funds. So as Carl likes to say, we have a significant war chest to take advantage of opportunities as they arise. Lastly, the board has maintained the quarterly distribution at 50¢ per depositary unit. Now turning to our investment segment. Despite the market volatility, we see considerable value creation potential in our portfolio.
At AEP, we see new management closing its ROE gap, improving regulatory outcomes, solidifying its balance sheet, and benefiting from tremendous electricity load growth due to AI-driven data center demand. We think electric utilities, particularly AEP, which has operations in real data center hotspots of Texas, Indiana, and Ohio, are an excellent way to benefit in the picks and shovels of AI. At SWICS, we see a gas utility that is closing its ROE gap to peers, seeing a push towards more favorable rate making in both Nevada and Arizona, and seeing attractive investment opportunities through the potential expansion of a FERC-regulated gas pipeline.
During the second quarter, SWIX was also able to execute on two sell-downs a century, its utility services division, getting the companies closer to a full separation. We believe that Century should also see an attractive multiyear growth opportunity given continued investment in the electrical and gas grids needed to drive all of the infrastructure investment from data centers, electrification, and reshoring. At Caesars, we have an excellent management team with tremendous owned real estate value and a growing digital business that is deploying its greater than 15% free cash flow yield to repurchase shares and repay debt. We think the digital business is really underappreciated.
In fact, in the second quarter, the digital business grew revenue 24% and EBITDA 100%. In time, we would expect Caesars digital business to be unlocked from its current structure as Caesars share price does not reflect the tremendous value of the business. The funds ended the quarter approximately 2% net long. Adjusting for our refining hedges, the fund was 23% net long. And now I will pass it on to Ted to cover our controlled businesses.
Ted Papapostolou: Thank you, Andrew. I will start at our energy segment. Energy segment consolidated EBITDA was negative $24 million for Q2 2025 compared to $103 million in Q2 2024. CVR's refining business was negatively impacted by the unfavorable mark-to-market RINs valuation and reduced throughput volumes in connection with the turnaround that was completed earlier in the year. This was offset in part by positive performance in the fertilizer business due to continued high prices and strong utilization. And now turning to our auto segment. Q2 2025 automotive service revenue decreased by $8 million compared to the prior year quarter. Same-store revenues were relatively flat as compared to the prior year quarter.
For reference, a quarter ago, the same comparison was down 5%. The positive trajectory is attributed to our continued investment in labor, inventory, equipment, facilities, and marketing. While the top line is improving, we are seeing higher labor costs and operating expenses associated with our continued investment. We anticipate these initiatives will improve long-term profitability. To give a couple of examples, our shop labor is improving the average ticket price by increasing the number of work order attachments, and we are renovating our facilities at our top-performing stores to enhance customer experience and drive car count. During the quarter, we closed 22 underperforming locations, bringing the total to 44 for 2025.
To offset store closures, we continue to add to our greenfield pipeline in attractive markets and plan on adding 16 locations by the end of the year. Now turning to our other operating segments. Real Estate's Q2 2025 adjusted EBITDA decreased by $2 million compared to the prior year quarter. During the quarter, we sold one of our country clubs. This investment has been highly successful over the years as we were able to execute our strategy to build profitable luxury homes and operate an exclusive club, which in turn increased the value of both the club and the surrounding development.
After years of investing in the club and selling through nearly all of our inventory, we have successfully achieved our strategy and monetized the club. We intend to redeploy this capital to mirror these results in our recently acquired club in Pinehurst, and we continue to seek new opportunities. Food packaging's adjusted EBITDA decreased by $9 million for Q2 2025 as compared to the prior year quarter. The decrease is primarily due to lower volume, higher manufacturing inefficiencies, and interim disruptive headwinds from the restructuring plan we announced last quarter. We anticipate continued operational inefficiencies during the implementation phase, which we expect to be substantially complete by 2025.
Both Home Fashion and Farmers adjusted EBITDA were flat when compared to the prior year quarter. And now turning to our liquidity. We maintain liquidity at the holding company and at each of our operating subsidiaries to take advantage of attractive opportunities. As of quarter-end, the holding company had cash and investment in the funds of $3.5 billion, and our subsidiaries had cash and revolver availability of $1.1 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.
Robert Flint: Operator, can you please open up the call for questions?
Operator: Thank you. Star one on your telephone and wait for your name to be announced. To remove yourself, press 11 again. One moment please for our first question, please. It comes from Andrew Berg with Post Advisory Group. Please proceed.
Andrew Berg: Hey. Either Andrew or Ted, just a quick question. With respect to the decrease in the cash balance, was most of that I'm referring to cash at the holding company level, the billion 86. Was most of that attributable to the increase in the CVR shares? Or can you just help reconcile the change from last quarter?
Ted Papapostolou: Yeah. The big drivers of the decrease are we have our interest payments of four of the six tranches paid in the quarter. And we also had two of the LP distributions paid. Because in Q1, you do not have one, but those are the two big drivers. It hits in Q2. And to an extent, the CVR repurchase, but that was, you know, about $32 million in the quarter.
Andrew Berg: Okay. Perfect. Thank you.
Operator: Thank you. And I'm not showing any further questions in the queue. I will turn it back to management for any final comments.
Andrew Teno: Alright. Well, thanks, everyone, for joining. We'll talk to you next quarter.
Operator: Thank you, ladies and gentlemen, for participating in today's conference. You may now disconnect.