Holding company and industrial conglomerate Icahn (NYSE:IEP) missed Wall Street’s revenue expectations in Q1 CY2025, with sales falling 24.6% year on year to $1.87 billion. Its GAAP loss of $0.79 per share was significantly below analysts’ consensus estimates.
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Icahn Enterprises (IEP) Q1 CY2025 Highlights:
- Revenue: $1.87 billion vs analyst estimates of $2.63 billion (24.6% year-on-year decline, 29% miss)
- EPS (GAAP): -$0.79 vs analyst estimates of $0.19 (significant miss)
- Adjusted EBITDA Margin: -15.4%
- Market Capitalization: $4.57 billion
StockStory’s Take
Icahn Enterprises’ first quarter results reflected ongoing pressures across several of its core businesses, as management pointed to underperformance in its investment funds and automotive segment. CEO Andrew Teno highlighted negative returns from healthcare investments and the effects of market volatility, noting, "NAV decreased $336 million... driven primarily by negative performance in the funds." The energy segment’s profitability was impacted by a scheduled refinery turnaround and adverse regulatory accruals, while the automotive business continued to suffer from store-level losses and restructuring efforts. CFO Ted Papapostolou commented that the company is investing in labor, inventory, and facilities to support a turnaround, acknowledging that these actions are weighing on short-term profitability.
Looking ahead, management’s forward outlook is shaped by the expectation of improved operating performance in both energy and automotive, contingent on the completion of key restructuring initiatives and favorable regulatory outcomes. CEO Andrew Teno expressed optimism about the potential resolution of the company’s outstanding regulatory liability related to small refinery exemptions, stating, “We remain hopeful that the new administration may lead to the resolution of our outstanding litigation… and potentially provide clarity to future years.” The leadership team emphasized the importance of cost discipline and asset optimization, with a focus on deploying its substantial cash reserves to capitalize on new opportunities and support value creation within its portfolio companies.
Key Insights from Management’s Remarks
Management attributed the quarter’s performance to negative returns from healthcare investments, operational disruptions in energy, and strategic store closures in automotive, while also signaling ongoing investments to reposition core businesses.
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Funds underperformed healthcare bets: The company’s investment segment posted negative returns, primarily attributed to underperformance in healthcare holdings. Management noted that market volatility contributed to an 8.4% decline in investment fund performance during the quarter.
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Energy segment impacted by refinery turnaround: The energy business faced lower profitability due to a scheduled turnaround at the Coffeyville refinery and unfavorable Renewable Identification Number (RIN) accruals. Management said positive trends in crack spreads and the completion of the turnaround are expected to support improved cash flow going forward.
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Automotive restructuring underway: The automotive segment continued to experience losses, prompting Icahn Enterprises to close 24 underperforming stores during the quarter. The team is investing in labor, inventory, and facility upgrades, with early improvements in car count and tire volumes, and expects these changes to drive future profitability.
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Real estate and asset sales progress: The real estate segment is preparing to close on previously announced property sales and is exploring additional divestitures. These actions are part of a broader asset optimization strategy intended to support liquidity and fund new investments.
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Liquidity position maintained: Icahn Enterprises ended the quarter with $1.3 billion in cash at the holding company and $900 million at the funds, reaffirming its ability to pursue strategic opportunities and maintain the quarterly distribution.
Drivers of Future Performance
Icahn Enterprises’ outlook is driven by restructuring progress in key businesses, regulatory outcomes, and disciplined capital allocation.
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Automotive turnaround initiatives: Management is focused on closing unprofitable automotive store locations and investing in labor and infrastructure improvements. They expect these efforts, already showing early signs of increased store traffic, to gradually restore segment profitability over the coming quarters as optimization is completed.
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Energy segment’s regulatory and operational milestones: The company is monitoring ongoing litigation related to small refinery exemptions, which, if resolved favorably, could remove a significant liability and improve future earnings. Additionally, the completion of the Coffeyville refinery turnaround positions the segment for improved cash flow, supported by management’s expectation of stronger crack spreads.
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Capital allocation and portfolio repositioning: With substantial liquidity, Icahn Enterprises intends to deploy capital into existing businesses and potential new investments. Management views AI-driven demand for electricity as a long-term growth driver for utility holdings, while ongoing asset sales in real estate are expected to further support capital flexibility.
Catalysts in Upcoming Quarters
In the upcoming quarters, the StockStory team will monitor (1) progress in optimizing the automotive segment, particularly the pace of store closures and improvements in profitability; (2) regulatory developments regarding small refinery exemptions and their potential impact on the energy business; and (3) the successful execution of planned real estate asset sales. The ability to deploy capital effectively and realize synergies from restructuring will also be key to tracking Icahn Enterprises’ recovery and growth trajectory.
Icahn Enterprises currently trades at a forward price-to-sales ratio of 0.4×. In the wake of earnings, is it a buy or sell? The answer lies in our full research report (it’s free).
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