By Ciara Linnane

CVR is a core holding company of Carl Icahn’s investment arm

Shares of Icahn Enterprises LP fell 14% on Tuesday after CVR Energy Inc., in which it owns a 66% stake, said it would suspend its third-quarter dividend as unplanned disruptions and a weak macro environment pressured earnings .

Shares of CVR ( CVI ) fell 26%, putting it on track for its biggest one-day percentage decline, if losses hold.

The company, which specializes in renewable fuels and oil refining as well as nitrogen fertilizers, posted a net loss of $124 million, or $1.24 per share, for the quarter after earnings of $353 million, or $3.51 per share in the year-earlier period.

Adjusted for one-time items, the company’s loss per share came in at 50 cents, higher than the FactSet analyst consensus of a loss of 9 cents.

Sales fell to $1.833 billion from $2.522 billion a year ago, also below the FactSet consensus of $1.910 billion.

Earnings in the refining business were hurt by “reduced refining performance attributable to unplanned downtime at both units, caused in part by external power outages during the quarter,” Chief Executive Dave Lamp said in prepared remarks.

“The board’s decision to suspend the quarterly dividend reflects its concerns about how long the current margin environment will persist in light of the company’s planned large trial at the Coffeyville refinery in the first quarter of 2025.”

The oil segment posted a loss of $110 million for the quarter, after revenues of $460 million a year ago. Refining margin was $253 per barrel of total production, down from $31.05 a year ago.

The nitrogen fertilizer segment had net income of $4 million, up from $1 million a year ago. Sales fell to $125 million from $131 million.

The company ended the quarter with $534 million in cash and cash equivalents, while debt and lease obligations were $1.6 billion at the end of the quarter.

Dismal earnings and dividend suspension are bad news for billionaire Carl Icahn’s investment arm (IEP). CVR Energy is a core holding of IEP, which is majority owned by Icahn and his son Brett.

The company provides exposure to Icahn’s personal portfolio of public and private companies — including auto parts makers, food packaging companies and real estate, along with energy companies. Its unit holders are mostly retail investors.

The stock is down 22% year-to-date after a year to 2023 when it was the target of a scathing report by short seller Hindenburg Research, which argued it overvalued certain assets and could not afford them. – quarterly dividend of $2 per share. It also revealed that Icahn himself had made billions of dollars in personal loans against shares or units he owned in Icahn Enterprises.

From the Archives (May 2023): Carl Icahn dismisses short seller Hindenburg Research report. It has already cost his company $6 billion in market cap.

More details (May 2023): Carl Icahn admits he was wrong to take a huge short position in the market that lost $9 billion

– Ciara Linnane

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10-29-24 1130 ET

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