Icahn Enterprises L.P.: Form 10-Q for the period ended Jun 30, 2024

The following discussion is intended to assist you in understanding our present business and the results of operations together with our present financial condition. This section should be read in conjunction with our unaudited condensed consolidated financial statements and the accompanying notes contained in this Quarterly Report on Form 10-Q for the period ended June 30, 2024 (this “Report”), as well as our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the Securities and Exchange Commission on February 29, 2024.

Executive Overview

Introduction

Icahn Enterprises L.P. (“Icahn Enterprises”) is a master limited partnership formed in Delaware on February 17, 1987 and headquartered in Sunny Isles Beach, Florida. We are a diversified holding company owning subsidiaries currently engaged in the following continuing operating businesses: Investment, Energy, Automotive, Food Packaging, Real Estate, Home Fashion and Pharma. We also report the results of our Holding Company, which includes the results of certain subsidiaries of Icahn Enterprises (unless otherwise noted), and investment activity and expenses associated with our Holding Company. References to “we,” “our,” “us” or “the Company” herein include Icahn Enterprises and its subsidiaries, unless the context otherwise requires.

Icahn Enterprises owns a 99% limited partner interest in Icahn Enterprises Holdings L.P. (“Icahn Enterprises Holdings”). Icahn Enterprises Holdings and its subsidiaries own substantially all of our assets and liabilities and conduct substantially all of our operations. Icahn Enterprises G.P. Inc. (“Icahn Enterprises GP”), which is indirectly owned and controlled by Mr. Carl C. Icahn, owns a 1% general partner interest in each of Icahn Enterprises and Icahn Enterprises Holdings as of June 30, 2024 representing an aggregate 1.99% general partner interest in Icahn Enterprises and Icahn Enterprises Holdings. Mr. Icahn and his affiliates owned approximately 85% of Icahn Enterprises’ outstanding depositary units as of June 30, 2024.

Recent Developments

Wynnewood Refinery Incident

Within our Energy segment, a fire commenced at the Wynnewood refinery during severe weather in the early morning hours of April 28, 2024. The fire was extinguished shortly after it started, with no employees or contractors injured. Operations at the Coffeyville refinery was not impacted by the fire. After further assessment of this incident, it was determined the damages were limited to pipe racks and pumps in the area of the naphtha processing units, which impacted service to the other units. CVR Energy, Inc. (“CVI”), our majority owned subsidiary in our Energy segment, estimates the impact from the downtime and increased expenses with this incident in the second quarter of 2024 was approximately $50 million in reduction to CVI’s income before taxes, excluding the potential impact of any successful insurance recovery.

Potential Strategic Transactions

As previously disclosed, we are considering, with CVI, potential strategic transactions available to CVI and its subsidiaries, which may include the acquisition of additional entities, assets or businesses, including the acquisition of material amounts of refining assets through negotiated mergers and/or stock or asset purchase agreements by CVI or its subsidiaries, and/or strategic options involving CVR Partners, LP, a controlled subsidiary of CVI. There is no assurance that any of the aforementioned or previously disclosed or other transactions will develop or materialize, or if they do, as to their timing.

Investment Fund Distribution and Redemption

See “Investment Funds Distributions and Redemptions” below under “Liquidity and Capital Resources.”

Results of Operations

Consolidated Financial Results

Our operating businesses comprise consolidated subsidiaries which operate in various industries and are managed on a decentralized basis. In addition to our Investment segment’s revenues from investment transactions, revenues for our operating businesses primarily consist of net sales of various products, services revenue, franchisor operations and leasing of real estate. Due to the structure and nature of our business, we primarily discuss the results of operations by individual reporting segment in order to better understand our consolidated operating performance. In addition to the summarized financial results below, refer to Note 14, “Segment Reporting,” to the condensed consolidated financial statements for a reconciliation of each of our reporting segment’s results of continuing operations to our consolidated results.

The conflict in the Middle East and the ongoing Russian/Ukraine conflict, can significantly impact the global oil, fertilizer, and agriculture markets. Such conflicts pose significant geopolitical risks to global markets, raise concerns of major implications, such as enforcement of sanctions, can contribute to further oil inventory tightening and price volatility, and can disrupt the production and trade of fertilizer, grains, and feedstock supply through several means, including trade restrictions and supply chain disruptions. The ultimate outcome of these conflicts and any associated market disruptions are difficult to predict and may affect our business, operations, and cash flows in unforeseen ways.

The comparability of our summarized consolidated financial results presented below is affected primarily by (i) the performance of the Investment Funds (as defined below), (ii) the results of operations of our Energy segment, impacted by the demand and pricing for its products and (iii) the deconsolidation of Auto Plus within our Automotive segment. Refer to our respective segment discussions and “Other Consolidated Results of Operations,” below for further discussion.

(in millions)

(in millions)

Investment

We invest our proprietary capital through various private investment funds (“Investment Funds”). As of June 30, 2024 and December 31, 2023, we had investments with a fair market value of approximately $2.9 billion and $3.2 billion, respectively in the Investment Funds. As of June 30, 2024 and December 31, 2023, the total fair market value of investments in the Investment Funds made by Mr. Icahn and his affiliates (excluding us and Brett Icahn) was approximately $1.9 billion and $2.1 billion, respectively.

Our Investment segment’s results of operations are reflected in net income in the condensed consolidated statements of operations. Our Investment segment’s net income (loss) is driven by the amount of funds allocated to the Investment Funds and the performance of the underlying investments in the Investment Funds. Future funds allocated to the Investment Funds may increase or decrease based on the contributions and redemptions by our Holding Company, Mr. Icahn and his affiliates and by Brett Icahn, Mr. Icahn’s son. Additionally, historical performance results of the Investment Funds are not indicative of future results as past market conditions, investment opportunities and investment decisions may not occur in the future. Changes in general market conditions coupled with changes in exposure to short and long positions have significant impact on our Investment segment’s results of operations and the comparability of results of operations year over year and as such, future results of operations will be impacted by our future exposures and future market conditions, which may not be consistent with prior trends. Refer to the “Investment Segment Liquidity” section of our “Liquidity and Capital Resources” discussion for additional information regarding our Investment segment’s exposure as of June 30, 2024.

For the three months ended June 30, 2024 and 2023, our Investment Funds’ returns were (8.1)% and (5.4)%, respectively. For the six months ended June 30, 2024 and 2023, our Investment Funds’ returns were (8.8)% and (9.3)%, respectively. Our Investment Funds’ returns represent a weighted-average composite of the average returns, net of expenses.

The following tables set forth the performance attribution and net income (loss) for the Investment Funds’ returns for the three and six months ended June 30, 2024 and 2023, respectively, and includes performance of all investment and derivative position types including the impact of the use of leverage through options, short sales, swaps, forwards and other derivative instruments.

(in millions)

Three Months Ended June 30, 2024 and 2023

For the three months ended June 30, 2024, the Investment Funds’ negative performance was primarily driven by net losses in long positions, which includes the impact of derivatives, offset in part by net gains in short positions. The negative performance of our Investment segment’s long positions was driven primarily by net losses from the healthcare and energy sectors of $861 million. The positive performance of our Investment segment’s short positions was driven by net gains in the energy sector of $485 million.

For the three months ended June 30, 2023, the Investment Funds’ negative performance was primarily driven by net losses in long positions. The negative performance of our Investment segment’s long positions was driven primarily by losses from one consumer, cyclical investment of $110 million, one healthcare sector investment of $104 million and the aggregate performance of long positions with net losses across various sectors of $93 million. The negative performance of our Investment segment’s short positions was driven by the negative performance of short broad market hedges of $253 million.

Six Months Ended June 30, 2024 and 2023

For the six months ended June 30, 2024, the Investment Funds’ negative performance was primarily driven by net losses in long and short positions. The negative performance of our Investment segment’s long positions was driven primarily by net losses from the healthcare and energy sectors of $482 million, offset in part by gains in the utilities sector of $134 million. The negative performance of our Investment segment’s short positions was driven primarily by net losses in broad market hedges of $163 million.

For the six months ended June 30, 2023, the Investment Funds’ negative performance was primarily driven by net losses in short positions. The negative performance of our Investment segment’s short positions was driven primarily by losses from a broad market hedge of $618 million and the aggregate performance of short equity and short credit positions with net losses across various sectors of $128 million.

Energy

Our Energy segment is primarily engaged in the petroleum refining and nitrogen fertilizer manufacturing businesses. The petroleum business accounted for approximately 93% and 91% of our Energy segment’s net sales for the six months ended June 30, 2024 and 2023, respectively.

The results of operations of the petroleum business are primarily affected by the relationship between refined product prices and the prices for crude oil and other feedstocks that are processed and blended into petroleum products, such as gasoline, diesel fuel and jet fuel that are produced by a refinery (“Refined Products”). The cost to acquire crude oil and other feedstocks and the price for which Refined Products are ultimately sold depend on factors beyond our Energy segment’s control, including the supply of and demand for crude oil, as well as gasoline, distillate, and other refined products, which, in turn, depend on, among other factors, changes in domestic and foreign economies, driving habits, weather conditions, domestic and foreign political affairs, production levels, the availability or permissibility of imports and exports, the marketing of competitive fuels and the extent of government regulations. Because the petroleum business applies first-in, first-out accounting to value its inventory, crude oil price movements may impact gross margin as a result of changes in the value of its unhedged inventory. The effect of changes in crude oil prices on the petroleum business’ results of operations is partially influenced by the rate at which the processing of Refined Products adjusts to reflect these changes.

In addition to recent market conditions, such as the ongoing conflict in the Middle East and the impact of the Russia/Ukraine conflict, there are long-term factors that may impact the demand for and inventory of Refined Products. These factors include mandated renewable fuels standards, proposed climate change laws and regulations, and increased mileage and emissions standards for vehicles. The petroleum business is also subject to the EPA’s Renewable Fuel Standard (“RFS”), which, each year, absent exemptions or waivers, requires the operating companies in our Energy segment to blend “renewable fuels” with their transportation fuels, purchase renewable identification numbers (“RINs”), to the extent available, in lieu of blending, or face liability. The price of RINs has been extremely volatile and the future cost of RINs for the petroleum business is difficult to estimate. Additionally, the cost of RINs is dependent upon a variety of factors, which include but are not limited to the availability of RINs for purchase, the actions of RINs market participants including non-obligated parties, the price at which RINs can be purchased, transportation fuel and renewable diesel production levels and pricing, the mix of the petroleum business’ petroleum products, the refining margin of the petroleum business and other factors, all of which can vary significantly from period to period, as well as certain waivers or exemptions to which the petroleum business’ obligated-party subsidiaries may be entitled. The costs to comply with the RFS are also impacted by, and dependent upon the outcome of, the numerous lawsuits filed by multiple refiners including the petroleum business’ obligated-party subsidiaries, biofuels groups and others. Refer to Note 18, “Commitments and Contingencies,” to the consolidated financial statements for further discussion of RINs.

Since 2022, our Energy segment has focused significant efforts on decarbonization initiatives including but not limited to the completion of the renewable diesel unit (“RDU”), the creation of an Environmental, Social and Governance (“ESG”) committee and the publication of multiple ESG reports. In addition, our Energy segment achieved mechanical completion of the renewable stock feeder pretreater project at its Wynnewood Refinery in the fourth quarter of 2023 with the unit becoming operational during the first quarter of 2024. Our Energy segment expects to continue to explore options to decarbonize its business in areas with attractive economics, without sole reliance on government subsidies.

(in millions)

Three Months Ended June 30, 2024 and 2023

Net sales for our Energy segment decreased by $271 million (12%) for the three months ended June 30, 2024 as compared to the comparable prior year period due to a decrease in our petroleum business’ net sales, which decreased $221 million, as well as a decrease in our nitrogen fertilizer business’ net sales by $50 million over the comparable period. The decrease in the petroleum business’ net sales was due to lower refined product prices resulting from elevated inventory levels and reduced demand along with fewer sales as a result of the Wynnewood Refinery fire during the current period. The decrease in our nitrogen fertilizer business’ net sales was primarily due to a decrease in urea ammonium nitrate (“UAN”) and ammonia pricing conditions primarily due to lower natural gas prices in the current period.

Cost of goods sold for our Energy segment decreased by $68 million (3%) for the three months ended June 30, 2024 as compared to the comparable prior year period. The decrease was primarily due to declines in our petroleum business as a result of a decrease in net sales, offset in part by a decline in RFS expense of $51 million which includes a favorable RINs liability revaluation of $2 million and a favorable derivatives impact of $20 million in the current period compared to losses in the three months ended June 30, 2023. Gross margin for our Energy segment decreased by $203 million for the three months ended June 30, 2024 as compared to the comparable prior year period. Gross margin as a percentage of net sales was 2% and 11% for the three months ended June 30, 2024 and 2023, respectively. The decrease in gross margin as a percentage of net sales was primarily attributable to the petroleum business, which was primarily due to lower refining margins driven by increased inventory levels and lower demand in the current year.

Six Months Ended June 30, 2024 and 2023

Net sales for our Energy segment decreased by $694 million (15%) for the six months ended June 30, 2024 as compared to the comparable prior year period due to a decrease in our petroleum business’ net sales, which decreased $546 million, as well as a decrease in our nitrogen fertilizer business’ net sales, which decreased $148 million over the comparable periods. The decrease in the petroleum business’ net sales was due to lower refined product prices resulting from elevated inventory levels and reduced demand along with fewer sales as a result of the Wynnewood Refinery fire during the current period. The decrease in our nitrogen fertilizer business’ net sales was primarily due to lower product sales prices attributable to natural gas prices reducing input costs and driving an overall decrease in the market prices.

Cost of goods sold for our Energy segment decreased by $281 million (7%) for the six months ended June 30, 2024 as compared to the comparable prior year period. The decrease was primarily due to declines in our petroleum business as a result of a decrease in net sales and lower derivative performance of $37 million, offset in part by a decline in RFS expense of $136 million which includes a favorable RINs liability revaluation of $37 million. Gross margin for our Energy segment decreased by $413 million for the six months ended June 30, 2024 as compared to the comparable prior year period. Gross margin as a percentage of net sales was 5% and 13% for the six months ended June 30, 2024 and 2023, respectively. The decrease in the gross margin as a percentage of net sales was primarily attributable to the petroleum business, which was primarily due to lower crack spreads and lower derivative performance, offset in part by favorable RINs liability revaluation.

Automotive

Our Automotive segment’s results of operations are generally driven by the demand for automotive service and maintenance, which is impacted by general economic factors, vehicle miles traveled, and the average age of vehicles on the road, among other factors.

Our Automotive segment has been in the process of a multi-year transformation plan. As part of this plan, during the year ended December 31, 2022, our Automotive segment completed the separation of certain of its Automotive Services and Aftermarket Parts businesses into two separate operating companies. In January 2023, Auto Plus filed a voluntary bankruptcy petition seeking relief under Chapter 11 of the Bankruptcy Code, which has reduced our Automotive segment’s assets, reduced the sales of our Automotive segment in the three and six months ended June 30, 2024 and prior periods, and will result in lower net sales from our Automotive segment in future periods. Our results of operations for the six months ended June 30, 2023 include the results of Auto Plus prior to its January 31, 2023 bankruptcy petition.

Our Automotive segment’s results include AEP PLC LLC (“AEP PLC”), which acquired $10 million in assets, mainly comprised of Aftermarket Parts inventory from the Auto Plus auction.

Our Automotive segment’s priorities include:

• Positioning the Automotive Services broad offerings to take advantage of opportunities in the do-it-for-me market and vehicle fleets;
• Strategic investment in brownfield and greenfield supplementing existing store footprints;
• Investment in, and strategic review of, capital projects within Icahn Automotive’s owned and leased locations to increase leasing revenue, restructure lease liabilities, and reduce occupancy costs;
• Optimization of Store and Distribution Center network while improving inventory and cost position;
• Investment to improve the overall customer experience through process, facilities and automation;
• Investment in employees with focus on training and career development; and
• Business process improvements and sharing best practices through investments in people, technology, and our overall supply chain.

The following table presents our Automotive segment’s net sales and other revenue from operations, cost of goods sold and other expenses from operations and gross profit. Our Automotive segment’s results of operations include Automotive Services labor along with the sale of any installed parts or materials related to Automotive Services. Automotive Services labor revenues are included in other revenues from operations in our consolidated statements of operations, however, the sales of any installed parts or materials related to Automotive Services are included in net sales. Rental revenues and related expenses for properties leased to third parties, which are included in other revenues from operations and related expenses which are included in other expenses in our consolidated statements of operations, are excluded from the table below. Therefore, we discuss the combined results of our Automotive net sales and Automotive Services labor revenues below.

(in millions)

Three Months Ended June 30, 2024 and 2023

Net sales and other revenues from operations for our Automotive segment for the three months ended June 30, 2024 decreased by $44 million (11%) as compared to the comparable prior year period. The decrease was primarily attributable to a decrease in Automotive Services of $29 million (7%), mainly due to reduced consumer spending on automotive repairs and maintenance. The decrease in the Automotive segment’s net sales was also partially due to a decrease in Aftermarket Parts revenue of $15 million (75%), mainly due to the winding down of the Aftermarket Parts business.

Cost of goods sold and other expenses from operations for the three months ended June 30, 2024 decreased by $39 million (13%) as compared to the comparable prior year period. The decrease was primarily driven by cost reduction efforts and lower net sales mainly due to reduced consumer spending on automotive repairs and maintenance. Gross margin on net sales and other revenue from operations for the three months ended June 30, 2024 decreased by $5 million (4%) from the comparable prior year period. Gross margin as a percentage of net sales and other revenue from operations was 31% and 29% for the three months ended June 30, 2024 and 2023, respectively.

Six Months Ended June 30, 2024 and 2023

Net sales and other revenues from operations for our Automotive segment for the six months ended June 30, 2024 decreased by $116 million (14%) as compared to the comparable prior year period. The decrease was attributable to a decrease in Aftermarket Parts sales of $74 million (80%), mainly due to the deconsolidation of Auto Plus as of January 31, 2023. The decrease in the Automotive segment’s net sales was also partially due to a decrease in Automotive Services of $42 million (6%), mainly due to reduced consumer spending on automotive repairs and maintenance.

Cost of goods sold and other expenses from operations for the six months ended June 30, 2024 decreased by $82 million (14%) as compared to the comparable prior year period. The decrease was primarily driven by decreased aftermarket parts sales related to the deconsolidation of Auto Plus, in addition to cost reduction efforts and lower net sales mainly related to reduced consumer spending on automotive repairs and maintenance at our Automotive Services business. Gross margin on net sales and other revenue from operations for the six months ended June 30, 2024 decreased by $34 million (14%) from the comparable prior year period. Gross margin as a percentage of net sales and other revenue from operations was 29% and 29% for the six months ended June 30, 2024 and 2023, respectively.

Food Packaging

Our Food Packaging segment’s results of operations are primarily driven by the production and sale of cellulosic, fibrous and plastic casings for the processed meat and poultry industry and derives a majority of its total net sales from customers located outside the United States.

Three Months Ended June 30, 2024 and 2023

Net sales for the three months ended June 30, 2024 decreased $12 million (10%) as compared to the comparable prior year period. The decrease was primarily due to a decrease of $7 million in price and product mix and lower volumes of $5 million. Cost of goods sold for the three months ended June 30, 2024 decreased $4 million (4%) compared to the comparable prior year period primarily due to effects of lower volume and corresponding lower absorption of manufacturing fixed costs. Gross margin as a percentage of net sales was 18% and 23% for the three months ended June 30, 2024 and 2023, respectively.

Six Months Ended June 30, 2024 and 2023

Net sales for the six months ended June 30, 2024 decreased $29 million (12%) as compared to the comparable prior year period. The decrease was primarily due to lower volumes of $17 million and a decrease of $12 million in price and product mix. Cost of goods sold for the six months ended June 30, 2024 decreased $15 million (8%) compared to the comparable prior year period primarily due to effects of lower volume and corresponding lower absorption of manufacturing fixed costs. Gross margin as a percentage of net sales was 19% and 23% for the six months ended June 30, 2024 and 2023, respectively.

Real Estate

Our Real Estate segment consists of investment properties which includes land, retail, office and industrial properties leased to corporate tenants, the development and sale of single-family homes, and the operations of a resort and two country clubs. Sales of single-family homes and investment properties are included in net sales in our consolidated statements of operations. Results from operations at investment properties and our country clubs are included in other revenues from operations in our consolidated statements of operations. Revenue from our real estate operations for the three months ended June 30, 2024 and 2023 was primarily derived from country club and resort operations. Revenue from our real estate operations for the six months ended June 30, 2024 and 2023 was primarily derived from the sale of single-family homes and resort operations.

Three Months Ended June 30, 2024 and 2023

Net sales for the three months ended June 30, 2024 decreased by $3 million (23%) as compared to the comparable prior year period primarily due to the decrease in single-family home sales as inventory is almost sold out in one country club, while the second country club is ramping up its development with sales expected to commence at the end of 2024 to early 2025. Cost of goods sold for the three months ended June 30, 2024 decreased $1 million (13%) compared to the prior year period primarily due to the aforementioned decrease in single-family home sales. Gross margin as a percentage of net sales was 30% and 38% for the three months ended June 30, 2024 and 2023, respectively.

Other revenues from operations for the three months ended June 30, 2024 decreased by $1 million (5%) as compared to the comparable prior year period. Other expenses from operations for the three months ended June 30, 2024 were flat compared to the prior year period.

Six Months Ended June 30, 2024 and 2023

Net sales for the six months ended June 30, 2024 decreased by $9 million (45%) as compared to the comparable prior year period primarily due to a decrease in single-family home sales as inventory is almost sold out in one country club, while the second country club is ramping up its development with sales expected to commence at the end of 2024 to early 2025. Cost of goods sold for the six months ended June 30, 2024 decreased $6 million (43%) compared to the prior year period primarily due to decreased home sales. Gross margin as a percentage of net sales was 27% and 30% for the six months ended June 30, 2024 and 2023, respectively.

Other revenues from operations for the six months ended June 30, 2024 was flat as compared to the comparable prior year period. Other expenses from operations for the six months ended June 30, 2024 increased by $1 million (3%) compared to the prior year period.

Home Fashion

Our Home Fashion segment is significantly influenced by the overall economic environment, including consumer spending, at the retail level, for home textile products.

Three Months Ended June 30, 2024 and 2023

Net sales for the three months ended June 30, 2024 decreased by $2 million (4%) as compared to the comparable prior year period mostly due to lower demand from our retail and international businesses. Cost of goods sold for the three months ended June 30, 2024 decreased by $2 million (6%) compared to the comparable prior year period mostly due to lower material costs and improved manufacturing efficiency. Gross margin as a percentage of net sales was 25% and 24% for the three months ended June 30, 2024 and 2023, respectively.

Six Months Ended June 30, 2024 and 2023

Net sales for the six months ended June 30, 2024 decreased $6 million (7%) as compared to the comparable prior year period mostly due to lower demand from our retail business. Cost of goods sold for the six months ended June 30, 2024 decreased by $7 million (10%) as compared to the comparable prior year period mostly due to lower material costs and improved manufacturing efficiency. Gross margin as a percentage of net sales was 25% and 22% for the six months ended June 30, 2024 and 2023, respectively.

Pharma

Our Pharma segment derives revenues primarily from the sale of its products directly to customers, wholesalers and pharmacies. Pursuant to previously announced settlement agreements, at the end of 2024 a competitor, and in the second half of 2025 a second competitor, will be permitted to launch competing generic products to the patent protected weight loss treatment sold within our Pharma segment in the United States, which we anticipate will cause a moderate reduction of prescription volume in the retail pharmacy market in the United States.

Three Months Ended June 30, 2024 and 2023

Net sales for the three months ended June 30, 2024 increased by $2 million (9%) as compared to the comparable prior year period primarily due to higher prescription growth resulting in increased sales. Cost of goods sold for the three months ended June 30, 2024 were flat compared to the comparable prior year period. Gross margin as a percentage of net sales was 44% and 39% for the three months ended June 30, 2024 and 2023, respectively.

Six Months Ended June 30, 2024 and 2023

Net sales for the six months ended June 30, 2024 increased by $6 million (14%) compared to the comparable prior year period primarily due to higher prescription growth resulting in increased sales. Cost of goods sold for the six months ended June 30, 2024 increased $2 million (8%) compared to the prior year period due to increased sales. Gross margin as a percentage of net sales was 43% and 40% for the six months ended June 30, 2024 and 2023, respectively.

Holding Company

Our Holding Company’s results of operations primarily reflect the loss on deconsolidation of one of its subsidiaries, credit loss on its related party note receivable, and interest expense on its senior unsecured notes for each of the three and six months ended June 30, 2024 and 2023.

Loss on deconsolidation of subsidiary

As discussed in Note 3, “Subsidiary Bankruptcy and Deconsolidation”, to the consolidated financial statements, we deconsolidated Auto Plus effective as of January 31, 2023, resulting in a pretax loss on deconsolidation of subsidiary of $246 million during the six months ended June 30, 2023.

Credit loss on related party note receivable

Our credit loss on related party note receivable of $116 million for the six months ended June 30, 2023 relates to the note receivable expected to be uncollectible.

Other Consolidated Results of Operations

Selling, General and Administrative

Three Months Ended June 30, 2024 and 2023

Our consolidated selling, general and administrative costs during the three months ended June 30, 2024 decreased by $32 million (15%) as compared to the comparable prior year period primarily due to lower expenses of our Automotive segment of $15 million mainly related to lower marketing expenses in the current period.

Six Months Ended June 30, 2024 and 2023

Our consolidated selling, general and administrative costs during the six months ended June 30, 2024 decreased by $68 million (15%) as compared to the comparable prior year period primarily due to lower expenses of our Automotive segment mainly related to the deconsolidation of Auto Plus, which included $28 million in the six months ended June 30, 2023.

Interest Expense

Three Months Ended June 30, 2024 and 2023

Our consolidated interest expense during the three months ended June 30, 2024 decreased by $8 million (6%) as compared to the comparable prior year period. The decrease was primarily due to lower interest expense for our

Investment segment of $19 million attributable to changes in short exposure composition. The decrease was offset in part by higher interest expense in our Holding Company segment of $7 million mainly due to the refinancing of bonds at higher rates than the comparable prior year period.

Six Months Ended June 30, 2024 and 2023

Our consolidated interest expense during the six months ended June 30, 2024 decreased by $14 million (5%) as compared to the comparable prior year period. The decrease was primarily due to lower interest expense for our Investment segment of $39 million attributable to changes in short exposure. The decrease was offset in part by higher interest expense in our Energy segment of $14 million, mainly due to the refinancing of bonds at higher interest rates than the comparative period.

Income Tax Expense

Certain of our subsidiaries are partnerships not subject to taxation in our condensed consolidated financial statements and certain other subsidiaries are corporations, or subsidiaries of corporations, subject to taxation in our condensed consolidated financial statements. Therefore, our consolidated effective tax rate generally differs from the statutory federal tax rate. Refer to Note 15, “Income Taxes,” to the condensed consolidated financial statements for a discussion of income taxes.

Liquidity and Capital Resources

Holding Company Liquidity

We are a holding company. Our cash flow and our ability to meet our debt service obligations and make distributions with respect to depositary units depends on the cash flow resulting from divestitures, equity offerings and debt financings, interest income, returns on our interests in the Investment Funds and the payment of funds to us by our subsidiaries in the form of loans, dividends and distributions. We may pursue various means to raise cash from our subsidiaries. To date, such means include receipt of dividends and distributions from subsidiaries, obtaining loans or other financings based on the asset values of subsidiaries or selling debt or equity securities of subsidiaries through capital market transactions. To the degree any distributions and transfers are impaired or prohibited, our ability to make payments on our debt or distributions on our depositary units could be limited. The operating results of our subsidiaries may not be sufficient for them to make distributions to us. In addition, our subsidiaries are not obligated to make funds available to us and distributions and intercompany transfers from our subsidiaries to us may be restricted by applicable law or covenants contained in debt agreements and other agreements.

As of June 30, 2024, our Holding Company had cash and cash equivalents of approximately $1.5 billion and total debt of approximately $4.9 billion. As of June 30, 2024, our Holding Company had investments in the Investment Funds with a total fair market value of approximately $2.9 billion. We may redeem our direct investment in the Investment Funds upon notice. See “Investment Segment Liquidity,” including under “Investment Funds Distributions and Redemptions,” below for additional information with respect to our Investment segment liquidity. See “Consolidated Cash Flows” below for additional information with respect to our Holding Company liquidity.

Holding Company Borrowings and Availability

Holding Company outstanding senior unsecured notes consist of the following:

(in millions)

(1) At June 30, 2024, total debt is net of notes held in treasury of $40 million aggregate principal amount of our 4.375% senior unsecured notes due 2029. At December 31, 2023, total debt is net of shares held in treasury of $12 million aggregate principal amount of our 6.25% senior unsecured notes due 2026, $5 million aggregate principal amount of our 5.25% senior unsecured notes due 2027, and $ 40 million aggregate principal amount of our 4.375% senior unsecured notes due 2029.

Holding Company debt consists of various issues of fixed-rate senior unsecured notes issued by Icahn Enterprises and Icahn Enterprises Finance Corp. (together the “Issuers”) and guaranteed by Icahn Enterprises Holdings (the “Guarantor”). Interest on each tranche of senior unsecured notes is payable semi-annually.

In May 2024, the Issuers issued $750 million in aggregate principal amount of 9.000% senior unsecured notes due 2030. The net proceeds from such issuance were used to redeem the remaining outstanding 6.375% senior unsecured notes due 2025 in full on June 13, 2024.

Each of our senior unsecured notes and the related guarantees are the senior unsecured obligations of the Issuers and rank equally with all of the Issuers’ and the Guarantor’s existing and future senior unsecured indebtedness and senior to all of the Issuers’ and the Guarantor’s existing and future subordinated indebtedness. Each of our senior unsecured notes and the related guarantees are effectively subordinated to the Issuers’ and the Guarantor’s existing and future secured indebtedness to the extent of the collateral securing such indebtedness. Each of our senior unsecured notes and the related guarantees are also effectively subordinated to all indebtedness and other liabilities of the Issuers’ subsidiaries other than the Guarantor.

The indentures governing our senior unsecured notes described above restrict the payment of cash distributions, the purchase of equity interests or the purchase, redemption, defeasance or acquisition of debt subordinated to the senior unsecured notes. The indentures also restrict the incurrence of debt or the issuance of disqualified stock, as defined in the indentures, with certain exceptions. In addition, the indentures require that on each quarterly determination date, Icahn Enterprises and the guarantor of the notes (currently only Icahn Enterprises Holdings) maintain certain minimum financial ratios, as defined therein. The indentures also restrict the creation of liens, mergers, consolidations and sales of substantially all of our assets, and transactions with affiliates. During the second quarter, the 6.375% senior notes due 2026 became callable without a premium. Additionally, each of the 5.250% seniors notes due 2027, the 4.375% senior notes due 2029 and the 9.000% senior notes due 2030 are subject to optional redemption premiums in the event we redeem any of these notes prior to six months before maturity. The 9.750% senior notes due 2029 are subject to optional redemption premiums in the event we redeem these notes prior to three months before maturity.

As of June 30, 2024 and December 31, 2023, we were in compliance with all covenants, including maintaining certain minimum financial ratios, as defined in the indentures. Additionally, as of June 30, 2024, based on covenants in the indentures governing our senior unsecured notes, we are not permitted to incur additional indebtedness; however, we are permitted to issue new notes in connection with debt refinancings of existing notes.

Debt Repurchase and Sales

In November and December of 2023, we repurchased in the open market approximately $35 million aggregate principal amount of our 4.750% senior unsecured notes due 2024, $12 million aggregate principal amount of our 6.25% senior unsecured notes due 2026, $5 million aggregate principal amount of our 5.25% senior unsecured notes due 2027, and $40 million aggregate principal amount of our 4.375% senior unsecured notes due 2029 for total cash paid of $84 million for a total aggregate principal amount $92 million. The Company cancelled and reduced the outstanding principal of the repurchased 4.750% senior unsecured notes due 2024, and the remaining repurchased notes of $57 million aggregate principal were extinguished but were not retired and are held in treasury. In April 2024, we sold the $12 million in aggregate principal amount of our 6.250% senior unsecured notes due 2026 and the $5 million in aggregate principal amount of our 5.250% senior unsecured notes due 2027, both previously repurchased and held in treasury, in the open market.

At-The-Market Offerings

During the three months ended June 30, 2024, we sold 2,798,377 depositary units pursuant to the Open Market Sale Agreement, resulting in gross proceeds of $49 million. During the six months ended June 30, 2024, we sold 5,573,986 depositary units pursuant to the Open Market Sale Agreement, resulting in gross proceeds of $99 million. We continue to have an Open Market Sale Agreement and Icahn Enterprises may sell its depositary units for up to an additional $51 million in aggregate gross sale proceeds pursuant to this agreement. No assurance can be made that any or all amounts will be sold during the term of the agreement, and we have no obligation to sell additional depositary units under the Open Market Sale Agreement. Depending on market conditions, we may continue to sell depositary units under the Open Market Sale Agreement, and, if appropriate, enter into a new Open Market Sale Agreement to continue our At-The-Market sales program. Our ability to access remaining capital under our At-The-Market program may be limited by market conditions at the time of any future potential sale. While we were able to sell depositary units during the six months ended June 30, 2024, there can be no assurance that any future capital will be available on acceptable terms or at all under this program.

LP Unit Distributions

During the six months ended June 30, 2024, Icahn Enterprises declared two quarterly distributions, each distribution in the amount of $1.00 per depositary unit in which each depositary unitholder had the option to make an election to receive either cash or additional depositary units. In connection with these distributions, aggregate cash distributions to all depositary unitholders that made a timely election to receive cash was $203 million, of which $115 million was distributed to Mr. Icahn and his affiliates.

On August 5, 2024, the Board of Directors of the general partner of Icahn Enterprises declared a quarterly distribution in the amount of $1.00 per depositary unit, which will be paid on or about September 25, 2024 to depositary unitholders of record at the close of business on August 9, 2024. Depositary unitholders will have until September 13, 2024 to make a timely election to receive either cash or additional depositary units. If a unitholder does not make a timely election, it will automatically be deemed to have elected to receive the distribution in additional depositary units. Depositary unitholders who elect to receive (or who are deemed to have elected to receive) additional depositary units will receive units valued at the volume weighted average trading price of the units during the five consecutive trading days ending September 20, 2024. Icahn Enterprises will make a cash payment in lieu of issuing fractional depositary units to any unitholders electing to receive (or who are deemed to have elected to receive) depositary units.

Repurchase Authorization

On May 9, 2023, the Board of Directors of Icahn Enterprises GP, the Company’s General Partner, approved a repurchase program which authorizes Icahn Enterprises or affiliates of Icahn Enterprises to repurchase up to an aggregate of $500 million worth of any of our outstanding fixed-rate senior unsecured notes issued by Icahn Enterprises and Icahn Enterprises Finance Corp. and up to an aggregate of $500 million worth of the depositary units issued by Icahn Enterprises (the “Repurchase Program”). The repurchases of senior notes or depositary units may be done for cash from time to time in the open market, through tender offers or in privately negotiated transactions upon such terms and at such prices as management may determine. The authorization of the Repurchase Program is for an indefinite term and does not expire until later terminated by the Board of Directors of Icahn Enterprises GP. As of June 30, 2024, the Company has not repurchased any of the Company’s depositary units and the Company has repurchased $92 million worth of senior unsecured notes in aggregate under the Repurchase Program. See “Debt Repurchases and Sales” above.

Investment Segment Liquidity

In addition to investments by us and Mr. Icahn, the Investment Funds historically have access to significant amounts of cash available from prime brokerage lines of credit, subject to customary terms and market conditions.

Additionally, our Investment segment liquidity is driven by the investment activities and performance of the Investment Funds. As of June 30, 2024, the Investment Funds had a net short notional exposure of 16%. The Investment Funds’ long exposure was 83% (82% long equity and 1% long credit) and its short exposure was 99% (85% short equity, 10% short credit and 4% short commodity). The notional exposure represents the ratio of the notional exposure of the Investment Funds’ invested capital to the net asset value of the Investment Funds at June 30, 2024.

Of the Investment Funds’ 83% long exposure, 46% was comprised of the fair value of its long positions and 37% was comprised mostly of single name equity forward and swap contracts. Of the Investment Funds’ 99% short exposure, 44% was comprised of the fair value of its short positions (with certain adjustments) and 55% was comprised mostly of short broad market index swap derivative contracts, short credit default swap contracts and short commodity contracts.

With respect to both our long positions that are not notionalized (46% long exposure) and our short positions that are not notionalized (44% short exposure), each 1% change in exposure as a result of purchases or sales (assuming no change in value) would have a 1% impact on our cash and cash equivalents (as a percentage of net asset value). Changes in exposure as a result of purchases and sales as well as adverse changes in market value would also have an effect on funds available to us pursuant to prime brokerage lines of credit.

With respect to the notional value of our other long positions (37% long exposure) and short positions (55% short exposure), our liquidity would decrease by the balance sheet unrealized loss if we were to close the positions at quarter end prices. This would be offset by a release of restricted cash balances collateralizing these positions as well as an increase in funds available to us pursuant to certain prime brokerage lines of credit. If we were to increase our short exposure by adding to these short positions, we would be required to provide cash collateral equal to a small percentage of the initial notional value at counterparties that require cash as collateral and then post additional collateral equal to 100% of the mark to market on adverse changes in fair value. For our counterparties who do not require cash collateral, funds available from lines of credit would decrease.

Investment Funds Distributions and Redemptions

Mr. Icahn and his affiliates (excluding us and Brett Icahn) made no redemptions from the Investment Funds during the six months ended June 30, 2024, and redeemed $1.5 billion from his personal interests in the Investment Funds included in the Investment segment in the six months ended June 30, 2023. As of June 30, 2024 and December 31, 2023, the total fair market value of investments in the Investment Funds owned by the Company was approximately $2.9 billion and $3.2 billion, respectively, representing approximately 60% of the Investment Funds’ assets under management as of each respective date.

In July 2024, the Investment Funds issued a pro-rata distribution of $650 million in cash, including $256 million to Mr. Icahn and his affiliates (excluding us and Brett Icahn) and $394 million to the Holding Company. Also in July 2024, Mr. Icahn and his affiliates (excluding us and Brett Icahn) redeemed $250 million from his personal interests in the Investment Funds included in the Investment segment.

Other Segment Liquidity

Segment Cash and Cash Equivalents

Segment cash and cash equivalents (excluding our Investment segment) consists of the following:

(in millions)

Segment Borrowings and Availability

Segment debt consists of the following:

(in millions)

Energy

In February 2024, CVR Energy redeemed all of its $600 million in aggregate principal amount of 5.25% senior unsecured notes due 2025. As a result of this transaction, CVR Energy recognized a $1 million loss on extinguishment of debt for the six months ended June 30, 2024.

Refer to our Annual Report on Form 10-K for the year ended December 31, 2023 for information concerning terms, restrictions and covenants pertaining to our subsidiaries’ debt. As of June 30, 2024, all of our subsidiaries were in compliance with all debt covenants.

Our segments have additional borrowing availability under certain revolving credit facilities as summarized below:

(in millions)

The above outstanding debt and borrowing availability with respect to each of our continuing operating segments reflects third-party obligations.

Consolidated Cash Flows

Our consolidated cash flows are composed of the activities within our Holding Company, Investment segment and other operating segments. Our Holding Company’s cash flows are generally driven by cash flows resulting from our subsidiaries loans, dividends, distributions and contributions, as well as divestitures and acquisitions, equity offerings and debt financings, interest income and expense. Our Investment segment’s cash flows are primarily driven by investment transactions, which are included in net cash flows from operating activities due to the nature of its business, as well as contributions to and distributions from Mr. Icahn and his affiliates (including Icahn Enterprises and Icahn Enterprises Holdings) and Brett Icahn, which are included in net cash flows from financing activities. Our other operating segments’ cash flows are driven by the activities and performance of each business as well as transactions with our Holding Company, as discussed below.

The following table summarizes cash flow information for Icahn Enterprises’ reporting segments and our Holding Company:

(in millions)

Eliminations

Eliminations in the table above relate to certain of our Holding Company’s transactions with our Investment and other operating segments. Our Holding Company’s net (investments in) distributions from the Investments Funds, when applicable, are included in cash flows from investing activities for our Holding Company and cash flows from financing activities for our Investment segment. Similarly, our Holding Company’s net distributions from (investments in) our other operating segments are included in cash flows from investing activities for our Holding Company and cash flows from financing activities for our other operating segments.

Holding Company

The decrease in interest payments for the six months ended June 30, 2024 over the comparable period is primarily due to the redemption of $1.1 billion aggregate principal amount of our 4.750% senior unsecured notes due in 2024 in December 2023, on which we paid interest of $26 million in the six months ended June 30, 2023.

Operating transactions with subsidiaries includes the reimbursement of operating expenses to our Investment segment based on an expense-sharing agreement.

Cash from operating segments is made up of dividends, distributions, and repayments of intercompany loans that are eliminated in consolidation. During the six months ended June 30, 2024, this includes cash dividends received from our Energy segment of $67 million, cash distributions received from our Real Estate segment of $16 million, cash distributions from our Automotive segment of $6 million and Investment segment of $1 million, and repayments of intercompany loans from our Pharma segment of $15 million. During the six months ended June 30, 2023, this includes cash dividends received from our Energy segment of $71 million and cash distributions from our Real Estate segment of $5 million.

Cash to operating segments is made up of intercompany loans and contributions to operating segments that are eliminated in consolidation. During the six months ended June 30, 2024, changes in cash to operating segments was mainly attributable to cash paid to our Automotive segment of $37 million, Real Estate segment of $11 million and Home Fashion segment of $9 million. During the six months ended June 30, 2023, this includes cash paid to our Automotive segment of $10 million, Real Estate segment of $8 million and our Home Fashion segment of $5 million.

Partnership contributions represent sales in connection with our At-The-Market offerings pursuant to our Open Market Sale Agreements, as discussed above.

Subsidiary Dividends

During the six months ended June 30, 2024, we received $67 million in dividends from our Energy segment. Subsequent to June 30, 2024, our Energy segment declared a cash dividend of $0.50 per share, which is payable August 19, 2024 to shareholders of record as of August 12, 2024. Our portion of the dividend is estimated to be approximately $33 million in cash.

Investment Segment

Our Investment segment’s cash flows from operating activities for the comparable periods were attributable to its net investment transactions.

Our Investment segment’s cash flows used in financing activities for the six months ended June 30, 2024 was mainly attributable to Brett Icahn’s net redemptions from the Investment Funds of $4 million. Our Investment segment’s cash flows used in financing activities for the six months ended June 30, 2023 was mainly attributable to redemptions paid to Mr. Icahn and his affiliates (excluding us and Brett Icahn) of $1.5 billion and Brett Icahn’s net redemptions of $8 million, respectively.

Other Operating Segments

Our other operating segments’ cash flows from operating activities before changes in operating assets and liabilities were primarily attributable to the results of our Energy segment during both periods. The change in cash flows from operating activities for the six months ended June 30, 2024 as compared to the comparable prior year was primarily due to a decrease in the operating results of our Energy segment primarily associated with a decrease in our petroleum business’ net sales.

Capital expenditures and turnaround expenditures are primarily from our Energy and Automotive segments and are primarily for maintenance and growth and includes the planned maintenance of one of its refineries in both periods.

Repayments of other borrowings are related to our Energy segment’s redemption of $600 million principal amount of its 5.25% senior unsecured notes due February 2025.

Distributions to non-controlling interests were from our Energy segment related to its regular quarterly dividends and distributions, excluding payments made to us.

Cash from Holding Company is made up of intercompany loans and contributions between our Holding Company and subsidiaries that are eliminated in consolidation. During the six months ended June 30, 2024, the changes in cash from Holding Company were mainly attributable to cash paid to our Automotive segment of $37 million, Real Estate segment of $11 million and our Home Fashion segment of $9 million. During the six months ended June 30, 2023, this included cash paid to our Automotive segment of $10 million, Real Estate segment of $8 million and our Home Fashion segment of $5 million.

Cash to Holding Company is made up of dividends, distributions and intercompany loans that are eliminated in consolidation. During the six months ended June 30, 2024, this includes cash dividends paid from our Energy segment of $67 million, cash distributions from our Real Estate segment of $16 million, cash distributions from our Automotive segment of $6 million, and repayments of intercompany loans from our Pharma segment of $15 million. During the six months ended June 30, 2023, this includes cash dividends from our Energy segment of $71 million and cash distributions from our Real Estate segment of $5 million.

Consolidated Capital Expenditures

There have been no material changes to our planned capital expenditures as compared to the estimated capital expenditures for 2024 reported in our Annual Report on Form 10-K for the year ended December 31, 2023.

Critical Accounting Estimates

The critical accounting estimates used in the preparation of our condensed consolidated financial statements that we believe affect our more significant judgments and estimates used in the preparation of our condensed consolidated financial statements presented in this Report are described in Management’s Discussion and Analysis of Financial Condition and Results of Operations and in the Notes to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023.

Recently Issued Accounting Standards

Refer to Note 2, “Basis of Presentation and Summary of Significant Accounting Policies,” to the condensed consolidated financial statements for a discussion of recent accounting pronouncements applicable to us.

Except as discussed below, information about our quantitative and qualitative disclosures about market risk did not differ materially from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2023.

Market Risk

Our predominant exposure to market risk is related to our Investment segment and the sensitivities to movements in the fair value of the Investment Funds’ investments.

Investment

The fair value of the financial assets and liabilities of the Investment Funds primarily fluctuates in response to changes in the value of securities. The net effect of these fair value changes impacts the net gains from investment activities in our condensed consolidated statements of operations. The Investment Funds’ risk is regularly evaluated and is managed on a position basis as well as on a portfolio basis. Senior members of our investment team meet on a regular basis to assess and review certain risks, including concentration risk, correlation risk and credit risk for significant positions. Certain risk metrics and other analytical tools are used in the normal course of business by the Investment segment.

The Investment Funds hold investments that are reported at fair value as of the reporting date, which include securities owned, securities sold, not yet purchased and derivatives as reported on our condensed consolidated balance sheets. Based on their respective balances as of June 30, 2024, we estimate that in the event of a 10% adverse change in the fair value of these investments, the fair values of securities owned, securities sold, not yet purchased and derivatives would be negatively impacted by approximately $220 million, $213 million and $606 million, respectively. However, as of June 30, 2024, we estimate that the impact to our share of the net gain (loss) from investment activities reported in our condensed consolidated statement of operations would be less than the change in fair value since we have an interest of approximately 60% in the Investment Funds.

As of June 30, 2024, our management, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of Icahn Enterprises’ and subsidiaries’ disclosure controls and procedures pursuant to the Rule 13a-15(e) and 15d-15(e) promulgated under the Exchange Act. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms, and include controls and procedures designed to ensure that information required to be disclosed by us in such reports is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting during the quarter ended June 30, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Other than as set forth below, there were no material changes to our risk factors during the six months ended June 30, 2024 as compared to those reported in our Annual Report on Form 10-K for the year ended December 31, 2023.

Our general partner, and its control person, has significant influence over us, and sales by our controlling unitholder pursuant to a margin call or otherwise could cause our unit price or the value of our assets in the Investment Funds to decline or otherwise impact our liquidity.

Mr. Icahn, through affiliates, owns 100% of Icahn Enterprises GP, the general partner of Icahn Enterprises, and approximately 85% of Icahn Enterprises’ outstanding depositary units as of June 30, 2024, and, as a result, has the ability to influence many aspects of our operations and affairs.

Mr. Icahn’s estate plan has been designed to assure the stability and continuation of Icahn Enterprises and to minimize the need to monetize his interests for estate tax or other purposes. In the event of Mr. Icahn’s death, a substantial majority of Mr. Icahn’s interests in Icahn Enterprises and its general partner are expected to pass to trusts or charitable organizations that will be under the control of a group that will include Icahn family members and current or former senior Icahn Enterprises executives. However, there can be no assurance that such planning will be effective. Furthermore, if upon Mr. Icahn’s death control of Icahn Enterprises GP is not given to Brett Icahn, Brett Icahn will have the right to terminate the manager agreement between Brett Icahn and Icahn Enterprises. In addition, it is currently anticipated that Brett Icahn will succeed Carl Icahn as Chairman of the board of Icahn Enterprises GP and as Chief Executive Officer of the Investment segment following the end of the 7-year term of the manager agreement or earlier if Carl Icahn should so determine.

In addition, in past years through the present, Mr. Icahn from time to time has had and currently has borrowings from lenders and has pledged assets he owns personally, directly or through his affiliates, to secure these loans, which pledged assets include Icahn Enterprises depositary units and interests in the Investment Funds. The number of depositary units and the amount of interests in the Investment Funds owned personally by Mr. Icahn, directly or through his affiliates, pledged to secure these loans has been substantial and has fluctuated over time as a result of the amount of outstanding principal amount of the loans, the market price of the depositary units, the value of the Investment Fund interests, and other factors. As of July 2, 2024, Mr. Icahn and his affiliates have pledged 406,313,986 depositary units and approximately $981 million of interests in the Investment Funds. Neither Icahn Enterprises nor any of its subsidiaries are party to these loans. Mr. Icahn amended and restated his loan agreements in July of 2023 (as amended and restated, the “Loan Agreement”), extending the maturity of certain of the previous loans, amending certain covenants, and providing for a principal payment of $500 million that was made prior to September 1, 2023, quarterly principal payments of $87.5 million beginning in September 2024, and a final principal payment of $2.6 billion at the end of the term. On July 2, 2024, Mr. Icahn and his affiliates entered into Amendment No. 1 to the Loan Agreement (“Amendment No. 1”). Among other changes, Amendment No. 1 extended the maturity of the Loan Agreement to July 2027 and correspondingly extended the payment due dates under the Loan Agreement, amended certain covenants, provided for a principal payment of approximately $453 million in connection with the execution of Amendment No. 1, and provided for additional quarterly principal payments of $87.5 million during the additional term of the Loan Agreement. In addition, Amendment No. 1 provides for the pledging by Mr. Icahn of (i) depositary units of IEP owned by Mr. Icahn, (ii) interests owned by Mr. Icahn in the Investment Funds, and (iii) certain other collateral unrelated to IEP or the Investment Funds. The terms of the Loan Agreement require that distributions paid upon, or proceeds from sales of, pledged depositary units be used to prepay the loans or be pledged as additional collateral. Pursuant to the terms of the Loan Agreement, a margin call may only be triggered in the event that the loan-to-value ratio set forth in the Loan Agreement is not maintained.

Unlike the previous loan agreements, for purposes of the loan-to-value ratio set forth in the Loan Agreement, the value of the pledged depositary units will be calculated based upon the Company’s indicative net asset value rather than the market price of the depositary units. Only a significant decline in the Company’s indicative net asset value, or the value of the interests in the Investment Funds, could result in margin calls. Declines in the trading price of the Company’s depositary units will no longer require Mr. Icahn to deposit additional funds or securities with the lenders or suffer foreclosure on or a forced sale of Mr. Icahn’s depositary units or other assets. While we are confident in our investment strategy and ability to continue to grow our investment portfolio through a refocused activist strategy, and in the effectiveness of our hedges, which are designed to avoid fluctuations in the value of our portfolio, successful execution of our activist investment activities and other aspects of our business involves many risks (including those set forth herein), some of which are out of our control.

Mr. Icahn may sell depositary units or make withdrawals from the Investment Funds in order to satisfy payment obligations under the Loan Agreements. Mr. Icahn has made withdrawals from the Investment Funds in recent months, including in connection with the principal payment made in connection with Amendment No. 1 to the Loan Agreements, and may make additional withdrawals in the future, in order to repay a portion of his loans and for other purposes. In the event Mr. Icahn makes withdrawal requests from the Investment Funds, the Investment Funds may satisfy such withdrawal requests with cash or cash equivalents on hand, proceeds from sales of assets held by the Investment Funds or capital contributions from the Company, which could adversely affect the value of the assets held by the Investment Funds as well as the liquidity available to the Company.

The affirmative vote of unitholders holding more than 75% of the total number of all depositary units then outstanding, including depositary units held by Icahn Enterprises GP and its affiliates, is required to remove Icahn Enterprises GP as the general partner of Icahn Enterprises. Mr. Icahn, through affiliates, holds approximately 86% of Icahn Enterprises’ outstanding depositary units. If sales of depositary units held by Mr. Icahn and his affiliates, as a result of a margin call, foreclosure, changes in tax laws, changes to his estate, or otherwise, were to cause Mr. Icahn and his affiliates to no longer hold at least 25% of the outstanding depositary units, Icahn Enterprises GP could potentially be removed as the general partner of Icahn Enterprises without Mr. Icahn’s consent.

Sales of a substantial number of depositary units held by Mr. Icahn and his affiliates could have a negative impact on the market price of our depositary units. Likewise, the market may anticipate sales by Mr. Icahn or his estate even if Mr. Icahn or his estate is not selling, or has no plans to sell, depositary units.

The Investment Funds’ investment strategy involves numerous and significant risks, including the risk that we may lose some or all of our investments in the Investment Funds. This risk may be magnified due to concentration of investments and investments in undervalued securities.

Our Investment segment’s revenue depends on the investments made by the Investment Funds. There are numerous and significant risks associated with these investments, certain of which are described in this risk factor and in other risk factors set forth herein and in our Annual Report on Form 10-K and other filings with the SEC.

Certain investment positions held by the Investment Funds may be illiquid. The Investment Funds may own restricted or non-publicly traded securities and securities traded on foreign exchanges. We may also have significant influence with respect to certain companies owned by the Investment Funds, including representation on the board of directors of certain companies, and may be subject to trading restrictions with respect to specific positions in the Investment Funds at any particular time. These investments and trading restrictions could prevent the Investment Funds from liquidating unfavorable positions promptly and subject the Investment Funds to substantial losses.

At any given time, the Investment Funds’ assets may become highly concentrated within a particular company, industry, asset category, trading style or financial or economic market, and the level of concentration can be increased through the use of swaps or other derivative instruments. In that event, the Investment Funds’ investment portfolio will be more susceptible to fluctuations in value resulting from adverse events, developments or economic conditions affecting the performance of that particular company, industry, asset category, trading style or economic market than a less concentrated portfolio would be. As a result, the Investment Funds’ investment portfolio’s aggregate returns may be volatile and may be affected substantially by the performance of only one or a few holdings.

Typically, our top holdings in the Investment Funds represent a significant percentage of our assets under management for the Investment Segment. Therefore, a significant decline in the fair market values of our larger positions may have a material adverse impact on our consolidated financial position, results of operations or cash flows and the trading price of our depositary units. Certain of the companies in our Investment Funds file annual, quarterly and current reports with the SEC, which are publicly available, and contain additional risk factors with respect to such companies.

The Investment Funds seek to invest in securities that are undervalued. The identification of investment opportunities in undervalued securities is challenging, and there are no assurances that such opportunities will be successfully recognized or acquired. While investments in undervalued securities offer the opportunity for above-average capital appreciation, these investments involve a high degree of financial risk and can result in substantial losses. Returns generated from the Investment Funds’ investments may not adequately compensate for the business and financial risks assumed.

From time to time, the Investment Funds may invest in bonds or other fixed income securities, such as commercial paper and higher yielding (and, therefore, higher risk) debt securities. It is likely that a major economic recession could severely disrupt the market for such securities and may have a material adverse impact on the value of such securities. In addition, it is likely that any such economic downturn could adversely affect the ability of the issuers of such securities to repay principal and pay interest thereon and increase the incidence of default for such securities.

For reasons not necessarily attributable to any of the risks set forth in this Report (e.g., supply/demand imbalances or other market forces), the prices of the securities in which the Investment Funds invest may decline substantially. In particular, purchasing assets at what may appear to be undervalued levels is no guarantee that these assets will not be trading at even more undervalued or otherwise lower levels at a future time of valuation or at the time of sale.

The prices of financial instruments in which the Investment Funds may invest can be highly volatile. Price movements of forward and other derivative contracts in which the Investment Funds’ assets may be invested are influenced by, among other things, interest rates, changing supply and demand relationships, trade, fiscal, monetary and exchange control programs and policies of governments, and national and international political and economic events and policies. Pursuant to the terms of our swap and other derivative agreements, certain events, including a voluntary or involuntary bankruptcy filing involving the company issuing the securities referenced by such agreements or a delisting of such referenced securities, could give our derivative counterparties termination rights that would result in the closing of our swap positions and the realization of any and all losses, even if the referenced securities are not extinguished and thereafter appreciate in value. The Investment Funds are subject to the risk of failure of any of the exchanges on which their positions trade or of their clearinghouses.

The use of leverage in investments by the Investment Funds may pose a significant degree of risk and may enhance the possibility of significant loss in the value of the investments in the Investment Funds.

The Investment Funds may leverage their capital if their general partners believe that the use of leverage may enable the Investment Funds to achieve a higher rate of return. Accordingly, the Investment Funds may pledge their securities in order to borrow additional funds for investment purposes. The Investment Funds may also leverage their investment return with options, short sales, swaps, forwards and other derivative instruments. The amount of borrowings that the Investment Funds may have outstanding at any time may be substantial in relation to their capital. While leverage may present opportunities for increasing the Investment Funds’ total return, leverage may increase losses as well. Accordingly, any event that adversely affects the value of an investment by the Investment Funds would be magnified to the extent such fund is leveraged, and the value of derivatives or other instruments used to provide leverage may not always be correlated to the value of the reference equity security, which could lead to increased losses in circumstances when the value of the reference security remains higher than that of the derivative. The cumulative effect of the use of leverage by the Investment Funds in a market that moves adversely to the Investment Funds’ investments could result in a substantial loss to the Investment Funds that would be greater than if the Investment Funds were not leveraged. There is no assurance that leverage will be available on acceptable terms, if at all.

In general, the use of short-term margin borrowings results in certain additional risks to the Investment Funds. For example, should the securities pledged to brokers to secure any Investment Fund’s margin accounts decline in value, the Investment Funds could be subject to a “margin call,” pursuant to which it must either deposit additional funds or securities with the broker, or suffer mandatory liquidation of the pledged securities to compensate for the decline in value. In the event of a sudden drop in the value of any of the Investment Funds’ assets, the Investment Funds might not be able to liquidate assets quickly enough to satisfy its margin requirements.

The Investment Funds may enter into repurchase and reverse repurchase agreements. When the Investment Fund enters into a repurchase agreement, it “sells” securities issued by the U.S. or a non-U.S. government, or agencies thereof, to a broker-dealer or financial institution, and agrees to repurchase such securities for the price paid by the broker-dealer or financial institution, plus interest at a negotiated rate. In a reverse repurchase transaction, the Investment Fund “buys” securities issued by the U.S. or a non-U.S. government, or agencies thereof, from a broker-dealer or financial institution, subject to the obligation of the broker-dealer or financial institution to repurchase such securities at the price paid by the Investment Funds, plus interest at a negotiated rate. The use of repurchase and reverse repurchase agreements by any of the Investment Funds involves certain risks. For example, if the seller of securities to the Investment Funds under a reverse repurchase agreement defaults on its obligation to repurchase the underlying securities, as a result of its bankruptcy or otherwise, the Investment Funds will seek to dispose of such securities, which action could involve costs or delays. If the seller becomes insolvent and subject to liquidation or reorganization under applicable bankruptcy or other laws, the Investment Funds’ ability to dispose of the underlying securities may be restricted. Finally, if a seller defaults on its obligation to repurchase securities under a reverse repurchase agreement, the Investment Funds may suffer a loss to the extent it is forced to liquidate its position in the market, and proceeds from the sale of the underlying securities are less than the repurchase price agreed to by the defaulting seller.

The financing used by the Investment Funds to leverage its portfolio will be extended by securities brokers and dealers in the marketplace in which the Investment Funds invest. While the Investment Funds will attempt to negotiate the terms of these financing arrangements with such brokers and dealers, its ability to do so will be limited. The Investment Funds are therefore subject to changes in the value that the broker-dealer ascribes to a given security or position, the amount of margin required to support such security or position, the borrowing rate to finance such security or position and/or such broker-dealer’s willingness to continue to provide any such credit to the Investment Funds. Because the Investment Funds currently have no alternative credit facility which could be used to finance its portfolio in the absence of financing from broker-dealers, it could be forced to liquidate its portfolio on short notice to meet its financing obligations. The forced liquidation of all or a portion of the Investment Funds’ portfolios at distressed prices could result in significant losses to the Investment Funds.