Ventas Q1 2024 Earnings Call Transcript

Quartr
Provided by Quartr
May 8, 2024

There are 5 speakers on the call.

Operator

Good morning, and welcome to the Icahn Enterprises LP's First Quarter 2024 Earnings Conference Call with Andrew Tino, President and Chief Executive Officer Ted Papopostoulou, Chief Financial Officer and Robert Flint, Chief Accounting Officer. I would now like to hand the call over to Robert Flint, who will read the opening statement.

Speaker 1

Thank you, operator. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward looking statements that 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 the expected future business and financial performance of Icahn Enterprises, LP 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.

Speaker 1

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.

Speaker 1

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 Tino, our Chief Executive Officer.

Speaker 2

Thank you, Rob. I will provide a brief overview of Q1 results and then we will be available for questions. 1st quarter net loss was $38,000,000 an improvement of $232,000,000 over Q1 of 2023. 1st quarter adjusted EBITDA was $134,000,000 an increase of $39,000,000 compared to Q1 2023. Indecutive net asset value ended the quarter at approximately $5,000,000,000 up $194,000,000 from the prior quarter.

Speaker 2

In terms of our controlled businesses, CVI has benefited from lower RINs expense, offset by wider than usual refined product basis. We believe there are opportunities swirling in the refining space and it will be disciplined to see if we can find something accretive and attractive. The Auto Service division is working on several key initiatives to drive earnings and cash flow. Ones of particular note include product sourcing and inventory reduction. Regarding our automotive owned real estate, we are making solid strides with our transformation plans.

Speaker 2

We have added key personnel to the team to further optimize the real estate portfolio and the auto service business through leasing, greenfields, store optimizations and outparcel development. This quarter, the investment funds had a negative return of 0.8%, primarily driven by energy sector and broad market shorts. If you were to subtract out the impact of our energy shorts, which offset our refining exposure, our returns would have been a positive 5.8% for the quarter. One particular contributor to performance was Southwest Gas Holdings, which increased in value through increased utility profitability and the impact of the recently completed Century IPO. We believe that Century and another one of our long positions, AEP, are beneficiaries of the need for investment in the grid and additional generation to support growing AI related data center demand.

Speaker 2

Our headline net short exposure of 27% is a net long exposure of 7% when you adjust for the energy hedges. This compares to net short exposure of 6% as of year end excluding the energy hedges. As you can see, we continue our recent trend of getting slightly more net long and focusing on our activist efforts. Additionally, the Board approved a $1 quarterly distribution per depository unit, which is consistent with last quarter. With that, let me turn it over to Ted for a detailed discussion of all of our segments.

Speaker 3

Thank you, Andrew. I will begin by reviewing the performance of our segments and comment on the strength of our balance sheet. Turning to our Investment segment. The funds had a negative return of 0.8% for the quarter. Long and other positions had a positive performance attribution of 12.6%, while short positions had a negative performance attribution of 13.4%.

Speaker 3

The holding company's interest in the funds was approximately $3,200,000,000 as of quarterend. And now turning to our Energy segment. Energy segment's EBITDA was $118,000,000 for Q1 2024 compared to $229,000,000 for Q1 2023. Q1 2024 refining margin per throughput barrel was $16.29 compared to $23.24 in the prior year quarter. This decrease is primarily driven by lower crack spreads offset in part by reduced RFS expenses, expenses and favorable RIN revaluation.

Speaker 3

Q1 2024 average realized gate prices for UAN decreased by 42 percent to $2.67 per tonne and ammonia decreased by 41% to $5.28 per tonne when compared to the prior year quarter. CVI declared a 1st quarter cash dividend of $0.50 per share. And now turning to our Automotive segment. Net sales and other revenues decreased $73,000,000 compared to Q1 2023, primarily driven by the deconsolidation of Auto Plus during the prior year quarter as well as reduced car count for the automotive service business. Adjusted EBITDA improved $2,000,000 for Q1 2024 compared to Q1 2023.

Speaker 3

Automotive service was able to maintain adjusted EBITDA through cost cutting and margin initiatives, which offset reduced car count. And turning to our Real Estate segment. Q1 twenty twenty four net sales and other revenues decreased by 5,000,000 dollars and adjusted EBITDA decreased by $2,000,000 compared to the prior year quarter, primarily driven by reduced sales of single family homes. And turning to our other operating segment. Food Packaging's adjusted EBITDA decreased by $4,000,000 for Q1 2024 as compared to the prior year quarter, driven by lower volumes due to softening demand.

Speaker 3

Home Fashion's EBITDA increased by $1,000,000 as compared to the prior year quarter, mainly due to margin improvement offset by lower sales. Pharma segment's adjusted EBITDA for Q1 2024 improved by $5,000,000 as compared to the prior year quarter, mainly due to higher sales and lower operating expenses. And 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 $4,900,000,000 and our subsidiaries had cash and revolver availability of $1,100,000,000 In summary, 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.

Speaker 3

Thank you. Operator, can you please open the call up for questions?

Operator

Thank Please be advised that the conference is being recorded. Our first question comes from the line of Dan Fannon with Jefferies. Your line is now open.

Speaker 4

Thanks. Good morning. Andrew, I wanted to follow-up on your comments around CVI. I think you said something about looking for strategic something around accretion. I know that the on their call, they talked about looking or exploring strategic options.

Speaker 4

So I was hoping you could maybe expand a bit upon that and maybe the rationale behind kind of the timing and why now?

Speaker 2

Hey, Dan. Good morning. So in terms of CVI and in general over we're long term investors, we're also deal makers and so we like to look at basically anything that presents itself. And so over the years, we've looked at a wide variety of things. We felt comfortable mentioning it today mainly because we put out the 8 ks a couple of weeks ago that from both CBI and UAN.

Speaker 2

And so when we look at our asset base, we think we are the CVI team are very good low cost operators. We think they're very good at running our refining business. And if we can find something interesting, then you would expect us to execute on it.

Speaker 4

So that would sorry, that would be more from the context of adding to your through M and A or strategic capital deployment versus exiting any of the existing businesses?

Speaker 2

I'd just say we look at all opportunities, whatever is available.

Speaker 4

Understood. And then just moving to the auto segment, if we look at the path forward and the roadmap you've laid out, your it seems like cost cutting and cost rationalization is still very much in focus. Is that really the playbook for 2024 and then sales recovery from there? Or should we are you thinking about or is the game plan or the outlook for sales to start to improve here more immediately in this kind of next couple of quarters?

Speaker 2

Yes. So I think if you were to look at just in the market in general in this space, I'd say demand is not spectacular, but and that's kind of a short term phenomenon we hope. But when we look at the long term opportunity for our auto service business, we think we have opportunities on all fronts. I think Dave has now been there as the permanent CEO for a few months and we think kind of the opportunities are really endless. If we talk about product sourcing for an example, we think the company really probably could have done a better job in the past, right?

Speaker 2

So when we look at all of our different product categories, if we're more strategic about how we're buying, if we're more strategic about how we're pricing, then we think there are opportunities to drive higher gross margins on products. We think there are opportunities to improve the service level in the stores. We think there are opportunities to expand the Greenfield program. We think there are opportunities to help in relocating stores. And so I think really the opportunities are all of the above.

Speaker 4

Great. That's helpful. And then I guess just at a high level, as you think about the environment, from a macro perspective and what you're seeing in terms of the activist investment style in this environment given higher rates, higher for longer. Are there more areas that you're seeing opportunity in than maybe you were a year ago? Or is it the opposite where the economic backdrop is still quite strong and you're not maybe seeing the valuations and or kind of the incremental opportunity that you've seen previously?

Speaker 4

Just trying to get a sense of today versus maybe a year ago in that investment opportunity set.

Speaker 2

Yes. So I've been at ICON for 4 years and I could say that pretty much there's always an opportunity for activism. Companies are always getting in trouble. Stock prices are always falling. Hidden gems can always be unlocked.

Speaker 2

And so in any given quarter, we're going through, I'm going to guess at least 10 different names where we think there's something. And we usually don't act, but we keep looking to find the right investments since then, but nothing that is not publicly disclosed.

Speaker 4

Understood. And then just lastly, appreciate the incremental disclosures around the hedging in the investment fund and the progress that you've made. Is this what do you envision as a steady state when you think about the hedges and the long exposure? Obviously, not trying to predict what you're going to do, but just generally as a philosophy, are you where you want to be or you think that there's more change in the context of the portfolio over the next kind of couple of quarters?

Speaker 2

Yes. So I don't think we really want to bet on where the market is going. I think we've been pretty clear we want to stay away from that. There probably are not any large scale changes as to what we're going to do in terms of taking down our short exposure. I think, Carl, would always like to be appropriately hedged.

Speaker 2

And I think based on how we feel and how we feel about our investments, that appropriate hedge could go down a little bit. But it's hard to take it off at these levels. So it's something we evaluate all the time, but I don't really foresee any material changes.

Speaker 4

Understood. Thanks for taking my questions.

Operator

Thank you. I'm currently showing no further questions at this time. I'd like to hand the conference back over to Andrew Tino for closing remarks.

Speaker 2

Thank you. So I'd like to leave today with a reminder that here at ICON Enterprises, we are intensely focused on our activism strategy. We have unique advantages including the Icon brand name and a long history and willingness to wage proxy contest. 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.

Speaker 2

Though returns can be lumpy and dissatisfying at times, as we continue to focus on our activist efforts at both our investment segment and controlled businesses, we believe they will bear fruit for all of our unitholders. We'll speak to everyone soon. Bye.

Operator

This concludes today's conference call. Thank you for your participation. You may now disconnect. Everyone, have a wonderful day.

Remove Ads
Powered by Quartr
Earnings Conference Call
Ventas Q1 2024
00:00 / 00:00
Remove Ads