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DATE
Wednesday, November 5, 2025 at 10 a.m. ET
CALL PARTICIPANTS
President — Andrew Teno
Chief Financial Officer — Ted Papapostolou
Operator
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RISKS
Food Packaging EBITDA Decline — Food packaging segment adjusted EBITDA decreased by $8 million in fiscal Q3 2025 (period ended Sept. 30, 2025), attributed to lower volume, higher manufacturing inefficiencies, and disruptive headwinds from an ongoing restructuring plan, which management expects to impact results through fiscal Q2 2026.
Home Fashion Softening Demand — Adjusted EBITDA in Home Fashion dropped by $4 million compared to fiscal Q3 2024, primarily due to weakening U.S. retail, and hospitality demand.
Pharma EBITDA Pressure — Pharma segment’s adjusted EBITDA declined by $7 million from the prior year quarter, driven by reduced sales resulting from generic competition in the anti-obesity market.
Real Estate EBITDA Decrease — Real Estate's adjusted EBITDA decreased by $12 million in fiscal Q3 2025, primarily due to the earlier sale of the Country Club.
TAKEAWAYS
NAV Increase -- Net asset value increased by $567 million in fiscal Q3 2025, led by refining and investment performance.
CVI Liability Removal -- Resolution of small refinery exemptions from 2019 to 2024 eliminated a $488 million liability from the CVI balance sheet.
Energy Segment Profitability -- Energy segment reported consolidated EBITDA of $625 million in fiscal Q3 2025 compared to a $35 million loss in fiscal Q3 2024.
Funds Performance -- Investment funds were up approximately 5%, excluding refining hedges in fiscal Q3 2025, with EchoStar (NASDAQ: SATS) as the largest contributor, and the broad market and refining hedges as main detractors.
Automotive Service Revenue -- Automotive service revenue grew by $21 million in fiscal Q3 2025, an increase of 6% compared to the prior year quarter.
Store Footprint Actions -- Closed 89 underperforming automotive locations, and opened 14 new sites over the twelve months through fiscal Q3 2025; 20 closures occurred after the quarter ended.
Property Transfer -- Majority of owned Automotive segment real estate moved to the Real Estate segment subsequent to quarter end to unlock value.
Real Estate Gains -- Closed certain property sales for a pretax gain of $223 million in fiscal Q3 2025.
Cash and Liquidity -- Holding company reported $3.4 billion in cash and investments in the funds as of fiscal Q3 2025; subsidiaries had $1.2 billion in cash and revolver availability at fiscal Q3 2025 quarter end.
Southwest Gas Prospects -- Management cited analyst forecasts that Southwest Gas (NYSE: SWX) could grow net income at a 14% CAGR from 2025 to 2029, while many peers are expected to grow net income at a 6%-8% CAGR over the same period.
Pharma Pipeline Development -- First patient enrollment for the Transcendent trial in pulmonary arterial hypertension (PAH) is scheduled for fiscal Q1 2026, with 300 global patients targeted.
SUMMARY
CVI’s net asset value contribution of $547 million in fiscal Q3 2025 benefited from both improved crack spreads and the removal of an extensive refinery liability. Automotive operations saw improved revenues in fiscal Q3 2025, along with major store closures and subsequent real estate transfers intended to enhance segment value. The company maintained high liquidity, with significant cash held at both the parent and subsidiary levels, supporting future investment flexibility.
EchoStar produced major investment gains, highlighted by substantial stock appreciation linked to spectrum asset transactions.
Management underscored ongoing activism as a strategic differentiator, with claims of unique “permanent capital structure” capabilities.
The investment thesis for American Electric Power (NASDAQ: AEP) emphasized its scale and positioned it to benefit from accelerating power demand associated with AI infrastructure.
Caesars (NASDAQ: CZR) underperformance did not alter management’s view, with continued focus on real estate assets, and digital growth, especially in iCasino.
The Transcendent trial in PAH could position the pharma segment at a development inflection point if clinical success is realized.
Management highlighted a new disclosed investment in Monro (NASDAQ: MNRO), viewing its 1,100-location footprint as an attractive opportunity for future discussion.
INDUSTRY GLOSSARY
PAH (Pulmonary Arterial Hypertension): A rare progressive disorder characterized by high blood pressure in the arteries of the lungs, with novel therapeutics providing significant market opportunity.
Crack Spreads: The differential between the purchase price of crude oil and the selling price of refined petroleum products, reflecting refining margins.
SWICS: Refers to Southwest Gas (NYSE: SWX), the natural gas utility company discussed as a core portfolio holding.
AEP: American Electric Power (NASDAQ: AEP); a regulated electric utility focused on transmission and power generation investments.
Transcendent Trial: The clinical study for Icahn’s developmental drug targeting PAH, anticipated to begin dosing in fiscal Q1 2026.
Full Conference Call Transcript
Andrew Teno: Thank you, Rob, and good morning, everyone. We had a good third quarter. NAV increased $567 million. CVI, net of refining hedges, increased NAV by $547 million. And the funds, excluding refining hedges, were up approximately 5%. For CVI, the outperformance was driven by three factors: the continued conflict in Ukraine, increased crack spreads, and most importantly, the resolution of our small refinery exemptions from 2019 to 2024, which removed a $488 million liability from the CVI balance sheet. Going forward, our hope is that the Trump administration and the EPA will continue to grant small refineries the exemptions they deserve. And to be clear, we believe that Wynnewood is entitled to receive 100% exemptions going forward.
Turning to the funds, we were up approximately 5% excluding refining hedges. The big winner for the quarter was our investment in EchoStar, and big detractors were the broad market and refining hedges. In terms of our top positions, AEP is an electric utility that is benefiting from the AI infrastructure build-out. Importantly, not all electric utilities will benefit the same from the AI build-out. In order to be a winner, you need to have four things: the right jurisdictions, the right assets, enough scale, and a hungry management team. AEP checks all those boxes. AEP has sizable operations in the data center hotspots of Texas, Indiana, Oklahoma, and Ohio, which have available land and low power prices.
AEP had the right assets given its 55% mix of earnings from transmission, which enables timely recovery on investments, and the ability to build new generation across multiple jurisdictions to support the increasing power needs. Scale is important because investments in new power generation are large dollars. A $3 billion investment can be too big for smaller entities to fund. With a greater than $60 billion market cap, AEP has the necessary scale. And lastly, you need to have a management team that is hungry, that wants to win, thinks creatively, and matches the intensity of the customer base. Under the leadership of the new CEO and CFO at AEP, we believe we are in excellent hands.
Turning to Southwest Gas, SWICS has recently completed its full separation from Century and now has an absolutely best-in-class balance sheet. The company should grow earnings faster than pure gas utilities given recent legislation and policies in both of its key jurisdictions, that should enable more timely recovery on investments. Southwest Gas also has a potential significant pipeline expansion for data center, power gen, and industrial users in Northern Nevada. With both growth drivers, two research analysts recently predicted that SWICS could grow net income at a 14% CAGR between 2025 and 2029, when many peers will be in the 6% to 8% range. For EchoStar, we were attracted to the asymmetric upside driven by the highly valuable spectrum assets.
The recent deals to sell spectrum to AT&T and SpaceX highlight that value with the stock having increased from the teens in June to approximately $75 per share as of quarter end. We think there is still considerable upside remaining. IFF is a high-quality consumer staple company. The refreshed management team's focus on high growth and innovation-led businesses has enabled IFF to streamline its portfolio, rightsize its balance sheet, and restore financial flexibility to invest in R&D and return cash to shareholders. With the company continuing to drive improvement within the Food Ingredients business, IFF is nearing an inflection point that will enable it to close its discount to peers.
For Caesars, no doubt we have been disappointed with the recent performance. But our thesis is unchanged. We see considerable owned real estate value, a growing high-quality digital business at the early stages of an iCasino rollout across the country, and significant free cash flow being used to repurchase shares. I would also like to mention our recent 13 filing related to an investment in Monroe, which has approximately 1,100 auto service locations across the US. We think Monroe is an attractive investment opportunity and look forward to discussing more in future calls. And now I would like to pass it on to Ted to discuss our controlled businesses.
Ted Papapostolou: Thank you, Andrew. I will start at our energy segment. Andrew has already touched on the major highlights. I'll just add that the energy segment consolidated EBITDA was $625 million for Q3 2025 compared to a loss of $35 million in Q3 2024. Moving to our Automotive segment, Q3 2025 automotive service revenue increased by $21 million or 6% as compared to the prior year quarter. As we fine-tune our product pricing, labor, and distribution strategies, we believe enhanced profitability will follow. We've also made significant changes to our store footprint. During the last twelve months, we closed a total of 89 underperformers, of which 20 came subsequent to Q3 2025, and we opened 14 new locations.
We will continue to analyze our footprint and close and open locations where appropriate. Subsequent to quarter end, we transferred the vast majority of our owned properties out of the Automotive segment into our Real Estate segment. We believe this move will help unlock the value of both our real estate and auto service operations. Now turning to the other operating segments. Real Estate's Q3 2025 adjusted EBITDA decreased by $12 million compared to the prior year quarter. This decrease was primarily due to the sale of our Country Club earlier this year. We expect EBITDA to increase in 2026 as we ramp up construction at our existing club and surrounding development.
During the quarter, we closed on certain properties for a pretax gain of $223 million. Food packaging's adjusted EBITDA decreased by $8 million for Q3 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. We expect the restructuring plan to impact results until its completion, which is now expected to be during Q2 2026. Home Fashion's adjusted EBITDA decreased by $4 million when compared to the prior year quarter, primarily due to softening demand in our U.S. Retail and hospitality business.
Pharma's adjusted EBITDA decreased by $7 million when compared to the prior year quarter, primarily due to reduced sales resulting from generic competition in the anti-obesity market. We are excited about our developmental drug for PAH. We finalized our partner for the CRO and have named the trial Transcendent. The trial will consist of approximately 90 sites across the globe with total enrollment of 300 patients. The first patient is to be dosed during Q1 2026. If this product obtains approval, it potentially will be the first disease-modifying product for the treatment of patients suffering from PAH. And now 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 $3.4 billion, and our subsidiaries had cash and revolver availability of $1.2 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.
Andrew Teno: Operator, can you please open up the call for questions?
Operator: Thank you so much. And as a reminder, to ask a question, please press 11 to get in the queue. And wait for your name to be announced. To remove yourself, press 11 again. Again, if you do have a question, press 11 to get in the queue. I will turn the call back to Andrew Teno for final comments.
Andrew Teno: Thank you very much. Thank you, everyone, for joining. And I'd like to leave with a reminder that here at Icahn Enterprises, we are intensely focused on our activism strategy. We have unique advantages, including the Icahn brand name, and a long history and willingness to wage proxy contests. It is this track record which frequently allows us to be invited to join boards and work cooperatively with our fellow directors to make the key changes that will drive shareholder value. Furthermore, given our balance sheet, liquidity, and permanent capital structure, we have the ability to tender for entire businesses, a tool most simply do not possess.
Though our returns can be lumpy and dissatisfying at times, and again this quarter, they were quite good, we continue to focus on our activist efforts at both our investment segment and controlled businesses, and we believe they will bear fruit for all unitholders. Speak soon.
Operator: Thank you. And with that, we conclude our conference for today. Thank you for participating. You may now disconnect.