Good morning and welcome to the Icahn Enterprises L.P. Second Quarter 2023 Earnings Call with Jesse Lynn, General Counsel; David Willetts, President and CEO; and Ted Papapostolou, Chief Financial Officer. I would now like to hand the conference over to Jesse Lynn, who will read their opening statement.

Thank you, operator. The Private Securities Litigation Reform Act of 1995 provides a Safe Harbor for forward-looking statement we make in this presentation, including statements regarding our future performance and plans for our businesses and potential acquisitions. Forward-looking statement 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 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. We assume no obligation to update or revise any forward-looking statement, should circumstances change except as otherwise required by law. This presentation also includes certain non-GAAP financial measures. 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. I'll now turn it over to David Willetts, our Chief Executive Officer.

Thank you, Jesse. Good morning and welcome to the second quarter 2023 Icahn Enterprises earnings conference call. Joining me on today's call is Ted Papapostolou, our Chief Financial Officer. I'll provide a brief overview of the second quarter results and then Ted and I will be available for questions. All net income and EBITDA amounts we'll discuss are attributable to Icahn Enterprises, unless we otherwise specify. For Q2 2023, we had a net loss of $269 million and an adjusted EBITDA of $34 million, compared to a net loss of $128 million and an adjusted EBITDA of $126 million for Q2 2022. The loss was attributable to the performance of the investment segment and additional losses related to the bankruptcy of Auto Plus, which is nearing completion. On a positive note, we see continued EBITDA improvements in our automotive segment and Food Packaging segments. Our indicative net asset value as of June quarter end, decreased to $5 billion as compared to $5.6 billion at the end of December 31, 2022. Indicative net asset value includes, among other things, changes in the fair value of certain subsidiaries, which are not included in our GAAP earnings reported above. For Q2 2023, our investment funds had a negative return of $215 million, or 5.4%. We are encouraged by the results to date in July, which served to underscore the volatility inherent in the market. CVR Energy posted solid results for the 2023 second quarter, though commodity pricing led to moderate declines versus prior quarter and prior year quarter. Given the company's cash position, the CVR Energy board declared a $0.50 regular dividend and a special $1 dividend for the quarter. CVR Partners achieved solid results for the 2023 second quarter, led by strong production offset by lower fertilizer pricing during the quarter. Our automotive segment posted strong year-over-year performance on an income and adjusted EBITDA. Automotive Services continues to show progress on its improvement plan, and its results are fully in line with our expectations. After consideration, the IEP board declared a $1 quarterly distribution payable in cash for additional units. With that, let me turn it over to Ted for a detailed discussion of all of our segments.

Thank you, David. I will begin by reviewing our consolidated results and then highlight the performance of our operating segments and comment on the strength of our balance sheet. For Q2 '23, we had a net loss of $269 million, which was a decline of $141 million from the prior year quarter. Q2 '23 includes a one-time $116 million loss related to the loan receivable from Auto Plus in connection with the bankruptcy, which will be included in our holding company segment. I will now provide more detail regarding the performance of our individual segments. The investment funds had a negative return of 5.4% for the quarter, which was driven primarily by the negative performance of a broad market hedge and the negative performance of two single-name long positions. For the quarter, long and other positions had a net negative performance attribution of 2.6% and short positions had a negative performance attribution of 2.8%. The investment funds had a net short notional exposure of 18% at the end of the quarter compared to a net short notional exposure of 47% at year end. Our investment in the funds was approximately $3.8 billion as of quarter end and now to our Energy segments. In Q2 '23, our Energy segment reported net sales of $2.2 billion compared to $3.1 billion in the prior year quarter. Adjusted EBITDA was $173 million for Q2 '23 compared to $273 million in Q2 '22. CVI declared a $0.50 per share cash dividend and a $1 per share special dividend. Q2 '23, refining margin per throughput barrel was $18.21 compared to $26.10 in the prior year quarter. This decrease was primarily due to declining crack spreads. The cost of rents continued to have a negative impact on our refining business with $90 million of related expense for…

[Operator instructions] Our first question comes from the line of Daniel Fannon with Jeffries. Please proceed.

Thanks. Good morning. So, just a question on first just on the dividend, $1 versus $2, I guess just curious about how you can -- the reason behind or the coming up with $1 and as you think about, what the cash flows from the underlying businesses are to support that, can you talk about the obligations as you think as both the debt as well as the dividend and then where you see the sources of cash flow to support the current dividend as you said today?

Good morning, Dan. Thanks for that. I think you've asked several questions there. So let me unpack that. As we've always done historically, we look at a number of different factors, right? Obviously, business performance, economic macros, obligations under the indentures, cash flows from the underlying companies. We look at the entire situation. Obviously, the world has changed at least for us given a number of the news articles that were in the first quarter, second quarter and so, we've taken all of that and with the board have looked at and determined that for this quarter, it made sense to adjust the dividend to a $1 distribution per unit, right? As we look forward, as we do every quarter, we take those same factors and we reassess what the dividend or distribution should be. Now, to your specific questions with regards to sources, there are several different sources, but, ultimately, what you take a look at is this is a lumpy, long-term business, right? We have, large wins from time to time and we have volatility in the market. We are not a company that necessarily has steady, predictable cash flow chunking in and out every quarter. So, given that unpredictability and lumpiness, we take a look at all the factors I mentioned to determine how we actually set a dividend or distribution. When it comes to sources, obviously, we have sizable amounts of cash on hand today. We have a large number of securities in our hedge funds and we have new operating companies, all of which can be sources of profit or sources of capital to return to shareholders or unit holders as we look forward; anything else to add to it?

You're spot on Dave.

So just to follow-up on that, is that implied that we should see more variability in the dividends on a quarterly or annual basis that we have seen historically?

I wouldn't read into it one way or the other, right. I think, when you take a look at a quarterly reevaluation every quarter, we have had the benefit in over the past number of years of having a fairly predictable, constant distribution. That said, I think we've always cautioned that we reevaluate that quarterly, and it's subject to change. There are no guarantees, but we have certainly served to provide a very healthy return to our unit holders over time with very attractive dividend yields and even when you take a look at the dividend yield, that would be implied based on share prices and per unit, it remains a healthy and attractive dividend yield. So I can't predict the future, but I think take everything I've said, as we're not changing our practice going forward, we're going to continue to do exactly what we've done, which is assessed things critically quarterly.

Understood. And then on the investment front, can you be more specific on what you have done in terms of the investment strategy that's different because it sounded very similar to what we've heard in the past, where the hedges are kind of broad and macro, and obviously the loans didn't contribute to positive returns either this quarter, but just so we understand going forward, how the investment strategy is potentially still utilizing hedging as ultimately, if it's really that different than what you've been doing on a long return basis?

Yeah, I think much -- appreciate the question because it's an important question. When you look at what we do, which is activism, our view on activism hasn't changed. We have -- I'd have to count them, but probably eight to 10 companies that we have invested in, where we have a degree of board representation. Those companies are in different stages of maturity in terms of what we're doing, and you can look at any number of the ones that are out there. When you take a look at what happened in the second quarter, sometimes the companies move in predictable ways, sometimes they do not. In quarter two, we had a confluence of events that across multiple positions. We had reductions in many of the positions, right? When I look at the actual plan and the actual capability of management and what they're looking to do over the next, not just, months, but quarters and years, we weren't actually very encouraged by our positions. We do adjust them from time to time, but I'd say with our long positions, I'm very proud of a number of positions that we have, right? You can point to each one of them, and see, I think, a clear progression over time, but it is over time, turnaround, which is effectively what we're doing with activism, oftentimes are bumpy in and of themselves, but we're very comfortable in our long positions, right? We do reassess it, not everyone is a winner, but we're comfortable in where we're headed. So nothing has really changed in terms of our longs. We continue to execute the play that we've executed. When you take a look at the short positions, I think that's where you do see a change, not necessarily in strategy, but the philosophy…

Understood. And then just to clarify on the shorts or is it more of the market or broader hedges have come down and the shorts are more reflective of offsetting longs to be more hedged within the context of the investment portfolio directly?

Both are true, right? The broad market hedges have come down materially. We still have a level of them because we think it makes sense because not everything is hedgeable on a name-by-name basis. But we have very specific name-by-name hedges, resector hedges to attempt to offset any risk that we see with the specific loans in that sector or that specific long itself.

Understood. Okay. Thank you.

And it comes from the line of Bruce Monrad with Northeast Investors Trust. Please proceed.

Hi guys, can you hear me okay?

We can. Good morning, Bruce.

Good morning and a question on food packaging, if that's okay. So obviously, outstanding numbers out of this case. So we use that is -- are the production probably -- it seems like Tim has nailed it on the production? Or is there also help on the revenue side, pricing? Or what's behind it all?

The answer is yes. What I'd say is Tim and the team, I think, have done a very, very good job on multiple levers. Not every initiative is where we would want it to be. But I think when you take a look at how that team has skilfully managed to offset headwinds or surprises, you can basically see that performance is up, right? And the bumper sticker is, they have been very good at thoughtfully looking at their gross margin percentages and increasingly and that's not just price. That's also working with the customers to make sure they're selling the right SKUs or the right items jettisoning low value to the customer, negative or low value to Viskase products. So gross margin management has been obviously a very, very strong performance factor. The plants, we have a new team on the plants. This isn't as of today, but it's over the course of this year, and they're getting their arms around our production issues. I think we have a very coherent, clear plan to continue to get yields and rates efficiencies where they need to be. They're not entirely where I think Tim wants them to be, but they're making steady and measured progress on a series of fairly complex process and technical issues. When you take a look at volume, generally speaking, there are puts and takes depending on which region you look at or which substrate you look at. But the team has done very well at balancing. I think the entire book of business and running it like a professional operation. I'm also pleased with the cash flow. They continue to generate cash flow, work through inventory and work to pay down the liabilities. So I think broadly speaking, the team has done a fantastic job.

Well, that's good. That's great. And these are obviously your top two compare -- toughest comparisons of the year. So this is great now. On the November call, you talked about a cocktail when things were good. I'll tell you that I'll be having a cocktail tonight and if you want to hop on a plane and come on up and join me with. Thank you.

Very good. Thanks Bruce.

And it comes from the line of Andrew Berg with Post Advisory Group. Please proceed.

Thanks. And IF I can follow up a little bit on Dan's questions to start, excuse me, with respect to the hedges, and I guess we'll see it in the queue later, is there any reason to believe you guys would have materially changed the short view with respect to the commercial real estate or safe to assume you guys still maintain that negative position, negative view.

You're referring to the CMBX position?

Correct.

Yes. We obviously still have a CMBX position. If you know anything about CMBX, it is a very intricate series of securities, and they don't move in a traditional fashion. So what I would say is, yes, we're still in it. Obviously, there's good news and there's bad news. It's very specific to the particular tranche of CMBX we're in and several anchor malls within each one. Every day is bringing grim news for some malls across the country, whereas others are able to refinance and continue on with a very happy position. So it's a very active position that we monitor and manage, but it's all contingent upon the health of the underlying malls and their ability to refinance.

Okay. With respect to the dividend, given that you get dividends coming up out of CVI, you get dividends coming up out of some of the other subsidiaries, it would strike me that the actual cash amount of dividends that you guys would pay on an annual basis is probably somewhere less than $100 million now. Safe to assume Carl has not changed his view on taking his dividends in stock versus cash? And if that's correct, then the right way to think about it is maybe net $100 million or so of cash dividends going out the door versus your liquidity, which I think you said was $1.5 million of cash at the holding company, almost $1.6 million at the end of the quarter. Is that the right way...

Roughly $1.5 billion. I guess two answers to that question. I think the first answer is until all the shareholders elect we really never know who is taking what in cash and who's taking what and securities. So the history would suggest some of the numbers that you've quoted. When we take a look at going forward, I think from this quarter, Carl has indicated, although he hasn't made a final determination that he is likely to take some mix of cash and securities. But his final election hasn't been determined, right? And obviously, beyond this quarter, there's no communication as to what his indications are, right? And historically, from time to time, Carl has taken distributions. So this is also in line, I think, with past practice.

Okay. And then from an operational basis segments with respect to automotive, on the services side, revenues were basically flat. Are you able to address what the EBITDA was coming out of the services business and how that may have moved in the quarter?

Ted, do we just -- we don't disclose that specifically.

We don't disclose that, yes. But currently, the automotive segment is pretty much -- because Auto Plus was deconsolidated during Q1. So Q2 is probably the first time where you can see i.e., the majority of it is the service business in Q2.

And the...

Let me specifically address your question, right? Here's how I think about the services business, right? The services business has gone through a few changes, and this will be a little wordy, but the context is important. When I take a look at 2020, 2021 and early '22, there was a reduction in terms of the store count as loss performing stores were shut down and jettison and the footprint was reconfigured, right? So revenue coming down is not necessarily alarming in and of itself, but what we have seen is the revenue, although very slightly down this quarter for services, it's really pricing has -- pricing and margin management has been significantly up. It's been a large driver of the year-to-date performance. Volume has been a slight negative, although we're actually pretty encouraged that it's up 2% to 3% on a same-store basis, as of late June and July. So I think revenue-wise, I'm actually pretty pleased with where Pep Boys is, the service company. As I look towards the next several quarters, they have -- they started in late 2022, dipping their feet back in the water of opening greenfields. So I know the CEO is currently in Indianapolis, celebrating the opening of I think its two locations there, and they've sort of been on a little bit of a road show. So as I look to the future, I think some of the volume issues are going to be ameliorated by the increased greenfields and I've said, going forward, we need to have more. It's just the company wasn't necessarily in a position to really commit to that. I've also taken a look at store or rather Scott has -- the CEO has taken a look at store hours, looked at refining the marketing, really dialing the…

Yes. No, that definitely helps. And it's nice to hear that you guys are making some progress there, especially from the cash generation side, and we look forward to hopefully seeing that EBITDA growth in the next couple of quarters? That's all I had. I appreciate all the color today guys.

Thanks Andrew.

Thank you. And with that, I will end the Q&A queue. I'll pass it back to David Willetts for final comments.

All right. We appreciate everyone's time today. Thank you for dialing in or joining us on the webcast. We look forward to talking to you in roughly another three months for quarter three results. Everyone, have a good day. Take care.

Thank you, everyone, for participating in today's conference. This does conclude the program and you may now disconnect.