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Item 1. Business

2024-02-29 compared with 2023-02-24 · 49 added, 66 removed, 146 unchanged (44% of the section changed)

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(“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 engaged in the following operating businesses:

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.

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In addition, we do not invest or intend to invest in securities as our primary business.

We intend to structure our investments to continue to be taxed as a partnership rather than as a corporation under the applicable publicly traded partnership rules of the Internal Revenue Code, as amended.

We structure and intend to continue structuring our investments to be taxed as a partnership rather than as a corporation under the applicable publicly traded partnership rules of the Internal Revenue Code, as amended.

Business Strategy and Core Strengths

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Today, we are a diversified holding company owning subsidiaries engaged in seven diversified reporting segments.

As of December 31, 2022, through our Investment segment, we have significant positions in various investments, which include FirstEnergy Corporation (FE), Xerox Corporation (XRX), Herc Holdings, Inc.

(HRI), Newell Brands, Inc.

(NWL) and Southwest Gas Holdings, Inc.

As of December 31, 2023, through our Investment segment, we have significant positions in various investments, which include Crown Holdings (CCK), Southwest Gas Holdings, Inc.

(SWX), International Flavors and Fragrances Inc.

(IFF), Illumina, Inc.

(ILMN) and Bausch Health Companies, Inc.

Several of our operating businesses started out as investment positions in debt or equity securities, held either directly by us or Mr.

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(‘‘CVR Energy’’), which started out as a position in our Investment segment and is now an operating subsidiary that comprises our Energy segment.

The acquisition of CVR Energy, like our other operating subsidiaries, reflects our opportunistic approach to value creation, through which returns may be obtained by, among other things, promoting change through minority positions at targeted companies in our Investment segment or by acquiring control of those target companies that we believe we could run more profitably ourselves.

companies in our Investment segment or by acquiring control of those target companies that we believe we could run more profitably ourselves.

During the next several years, we see a favorable opportunity to follow an activist strategy that centers on the purchase of target stock and the subsequent removal of any barriers that might interfere with a friendly purchase offer from a strong buyer.

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We believe that the companies that we target for our activist activities are undervalued for many reasons, often including inept management.

Unfortunately for the individual investor, in particular, and the economy, in general, many poor management teams are often unaccountable and very difficult to remove.

Unfortunately for the individual investor, in particular, and the economy, in general, many poor management teams and boards of directors are often unaccountable and very difficult to remove.

Unlike the individual investor, we have the wherewithal to purchase companies that we feel we can operate more effectively than incumbent management.

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Icahn believes that the current environment continues to be conducive to activism.

Many major companies have substantial amounts of cash.

We believe that they are hoarding cash, rather than spending it, because they do not believe investments in their business will translate to earnings.

We believe that one of the best ways for many cash-rich companies to achieve increased earnings is to use their large amounts of excess cash, together with advantageous borrowing opportunities, to purchase other companies in their industries and take advantage of the meaningful synergies that could result.

In our opinion, the CEOs and Boards of Directors of undervalued companies that would be acquisition targets are the major road blocks to this logical use of assets to increase value, because we believe those CEOs and Boards of Directors are not willing to give up their power and perquisites, even if they have done a poor job in administering the companies they have been running.

In addition, acquirers are often unwilling to undertake the arduous task of launching a hostile campaign.

This is precisely the situation in which we believe a strong activist catalyst is necessary.

We believe that the activist catalyst adds value because, for companies with strong balance sheets, acquisitions of their weaker industry rivals is often extremely compelling financially.

We further believe that there are many transactions that make economic sense, even at a large premium over market.

Acquirers can use their excess cash, that is earning a very low return, and/or borrow at the advantageous interest rates now available, to acquire a target company.

In either case, an acquirer can add the target company’s earnings and the income from synergies to the acquirer’s bottom line, at a relatively low cost.

But for these potential acquirers to act, the target company must be willing to at least entertain an offer.

We believe that often the activist can step in and remove the obstacles that a target generally may seek to use to prevent an acquisition.

We often find investment opportunities when companies execute value destructive acquisitions or fail to unlock their own “hidden jewels” through separation transactions.

Companies also find themselves listening to the advice of conflicted advisors and pursue complex, costly and never-ending litigation when acceptable quick fixes can be found.

Management teams often fail to improve their operations and profitability, relying on lax oversight from an overly friendly board of directors.

It is our belief that our strategy will continue to produce strong results into the future.

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Our Investment segment is comprised of various private investment funds (“Investment Funds”) in which we have general partner interests and through which we invest our proprietary capital.

We, certain of Mr.

Icahn’s wholly-owned affiliates and Brett Icahn, son of Mr.

Icahn, are the sole investors in the Investment Funds.

As general partner, we provide investment advisory and certain administrative and back-office services to the Investment Funds but do not

provide such services to any other entities, individuals or accounts.

As general partner, we provide investment advisory and certain administrative and back-office services to the Investment Funds but do not provide such services to any other entities, individuals or accounts.

We and certain of Mr.

Icahn’s family members and affiliates are the only investors in the Investment Funds.

Interests in the Investment Funds are not offered to outside investors.

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We have no interest in, nor do we generate any income from, any such co-investments, which have been and may continue to be substantial.

We conduct our Energy segment through our majority owned subsidiary, CVR Energy.

We conduct our Energy segment through our majority owned subsidiary, CVR Energy, Inc.

(“CVR Energy”).

CVR Energy is headquartered in Sugar Land, Texas.

CVR Energy is a reporting company under the Exchange Act and files annual, quarterly and current reports, proxy statements and other information with the SEC that are publicly available.

CVR Energy is a diversified holding company primarily engaged in the petroleum refining and marketing industry through its petroleum business and in the nitrogen fertilizer manufacturing industry through its holdings in CVR Partners, LP, a publicly traded limited partnership (“CVR Partners”).

CVR Energy is a diversified holding company primarily engaged in the petroleum refining and marketing businesses as well as in the nitrogen fertilizer manufacturing businesses through its holdings in CVR Partners, LP, a publicly traded limited partnership (“CVR Partners”).

CVR Energy is an independent petroleum refiner and marketer of high value transportation fuels primarily in the form of gasoline and diesel fuels, as well as renewable diesel.

CVR Partners produces and markets nitrogen fertilizers in the form of urea ammonium nitrate (“UAN”) and

CVR Energy has a general partner interest in CVR Partners.

In addition, CVR Energy owns 37% of the outstanding common units of CVR Partners as of December 31, 2022.

As of December 31, 2022, we owned approximately 71% of the total outstanding common stock of CVR Energy.

CVR Partners produces and markets nitrogen fertilizers in the form of urea ammonium nitrate (“UAN”) and ammonia.

CVR Energy holds 100% of the general partner interest and approximately 37% of the outstanding common units of CVR Partners as of December 31, 2023.

During 2023, we decreased our ownership in CVR Energy through the sale of common stock resulting in proceeds of $158 million and as of December 31, 2023, we owned approximately 66% of the total outstanding common stock of CVR Energy.

Our Energy segment’s net sales for the years ended December 31, 2023, 2022 and 2021 represented approximately 83%, 81% and 70%, respectively, of our consolidated net sales, primarily from the sale of its petroleum products.

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CVR Energy’s refining business has the capability to process a variety of crude oil blends.

It’s oil refineries in Coffeyville, Kansas and Wynnewood, Oklahoma have a combined capacity of approximately 206,500 barrels per day (“bpd”).

Its oil refineries in Coffeyville, Kansas and Wynnewood, Oklahoma have a combined capacity of approximately 206,500 barrels per day (“bpd”).

In April 2022, CVR Energy converted its Wynnewood refinery’s hydrocracker to a renewable diesel unit (“RDU”) with a nameplate capacity of 7,500 bpd, which RDU is also capable of being returned to hydrocarbon service.

In addition to the use of third-party pipelines for the supply of crude oil, CVR Energy has an extensive gathering system consisting of logistics assets that are owned, leased or part of a joint venture operation.

Petroleum refining product yield includes gasoline, diesel fuel, pet coke and other refined products such as natural gas liquids, asphalt and jet fuel among other products.

Petroleum refining product yield

includes gasoline, diesel fuel, pet coke and other refined products such as natural gas liquids, asphalt and jet fuel among other products.

CVR Partners produces and distributes nitrogen fertilizer products, which are used by farmers to improve the yield and quality of their crops.

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The East Dubuque facility is able to purchase natural gas at competitive prices due to its connection to the Northern Natural Gas interstate pipeline system, which is within one mile of the facility, and a third-party owned and operated pipeline.

On November 21, 2022, CVR Energy’s board of directors authorized its management to explore a potential spin-off of CVR Energy’s interest in the nitrogen fertilizer business into a newly created and separately traded public company.

If completed, upon effectiveness of the potential spin-off transaction, current CVR Energy stockholders would own shares of both CVR Energy, holding the refinery and renewables businesses, and a holding company, holding CVR Energy’s current ownership of the general partner interest in, and approximately 37 percent of the common units (representing limited partner interests) of, CVR Partners.

If CVR Energy proceeds with the spin-off, it would be intended to be structured as a tax-free, pro-rata distribution to all of CVR Energy’s stockholders, including Icahn Enterprises, as of a record date to be determined by CVR Energy’s board of directors.

Completion of any potential spin-off would be subject to various conditions, including final approval of CVR Energy’s board of directors, and there can be no assurance that the potential spin-off will be completed in the manner described above, or at all.

Environmental Regulations

CVR Energy’s petroleum and nitrogen fertilizer businesses are subject to extensive and frequently changing federal, state and local, environmental, health and safety laws and regulations governing the emission, transportation, storage, disposal and release of regulated substances or wastes, the treatment and discharge of waste-water and storm water, and the storage, handling, use and transportation of petroleum and nitrogen products, and the characteristics and composition of gasoline, diesel fuels, UAN and ammonia.

These laws and regulations, their underlying regulatory requirements, and the enforcement thereof, impact the petroleum and nitrogen fertilizer businesses and their operations by imposing:

● restrictions on operations or the need to install enhanced or additional monitoring of controls;

● liability for the investigation and remediation of contaminated soil and groundwater at current and former facilities (if any) and for off-site waste disposal locations;

● specifications for the products marketed by the petroleum business and the nitrogen fertilizer business, primarily gasoline, diesel fuel, UAN and ammonia.

CVR Energy’s businesses are subject to extensive and frequently changing federal, state and local, environmental, health and safety laws and regulations governing the emission, discharge, transportation, storage, handling, use, treatment, disposal and release of regulated materials, substances or wastes, including waste-water and storm water, petroleum, renewable and nitrogen products, gasoline, diesel fuels, renewable fuels, UAN and ammonia.

These laws and regulations and the enforcement thereof impact CVR Energy’s businesses and their operations by imposing:

● restrictions on operations or the need to install and operate enhanced or additional control and monitoring equipment;

● liability for the investigation and remediation of contaminated environmental medial, including soil and groundwater on, in, at, under or from current and former facilities (if any) and for off-site waste disposal locations;

● specifications for the products marketed by the petroleum business and the nitrogen fertilizer business, primarily gasoline, diesel and aviation fuels, UAN and ammonia.

CVR Energy’s operations require numerous permits, licenses and authorizations.

Failure to comply with these permits, licenses and authorizations or environmental laws and regulations could result in fines, penalties or other sanctions or a revocation of CVR Energy’s permits, licenses or authorizations.

In addition, the laws and regulations to which CVR Energy is subject to are often evolving and many of them have or could become more stringent or have or could become subject to more stringent interpretation or enforcement by federal or state agencies.

Failure to comply with these permits, licenses, authorizations, or environmental laws, rules and regulations could result in fines, penalties or other sanctions or liabilities or a revocation of CVR Energy’s permits, licenses or authorizations.

In addition, the laws, rules, and regulations to which CVR Energy is subject to are often evolving and many of them have or could become more stringent or have or could become subject to more stringent interpretation or enforcement by federal, state or local agencies or courts.

These laws and regulations could result in increased capital, operating and compliance costs.

CVR Energy’s businesses are also subject to, or impacted by, various other environmental laws and regulations such as the federal Clean Air Act, the federal Clean Water Act, the federal comprehensive Environmental Response, Compensation and Liability Act, the federal Resource Conversation and Recovery Act, federal release reporting requirements relating to the release of hazardous substances into the environment, certain fuel regulations, renewable fuel standards, as discussed below, and various other laws and regulations.

CVR Energy’s businesses are also subject to, or impacted by, various other environmental laws and regulations such as the federal Clean Air Act, the federal Clean Water Act, the federal Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), the federal Resource Conversation and Recovery Act (RCRA), federal release reporting requirements relating to the release of hazardous substances into the environment, certain fuel regulations, renewable fuel standards, as discussed below, and various other laws and regulations.

Renewable Fuel Standard

CVR Energy’s subsidiaries, Coffeyville Resource Refining & Marketing, LLC (“CRRM”) and Wynnewood Refining Company, LLC (“WRC” and together with CRRM the “obligated-party subsidiaries”) are subject to the Clean Air Act’s renewable fuel standard (“RFS”) which requires refiners to either blend “renewable fuels” with their transportation fuels or purchase renewable fuel credits, known as renewable identification numbers, in lieu of blending.

CVR Energy’s subsidiaries, Coffeyville Resource Refining & Marketing, LLC (“CRRM”) and Wynnewood Refining Company, LLC (“WRC” and together with CRRM the “obligated-party subsidiaries”) are subject to the Clean Air Act’s renewable fuel standard (“RFS”) which requires obligated parties whose obligations under the RFS are not otherwise waived or exempted to either blend “renewable fuels” with their transportation fuels or purchase renewable fuel credits, known as renewable identification numbers, in lieu of blending.

See Item 1A, “Risk Factors” and Note 19, “Commitments and Contingencies,” to the consolidated financial statements for further discussion.

We conduct our Automotive segment through our wholly owned subsidiary, Icahn Automotive Group LLC (“Icahn Automotive”).

Icahn Automotive is headquartered in Kennesaw, Georgia.

Icahn Automotive was formed by us to invest in and operate businesses involved in automotive repair and maintenance services (“automotive services”) as well as the distribution and sale of automotive aftermarket parts and accessories to end-user do-it-yourself customers, wholesale distributors, and professional auto mechanics (“aftermarket parts”).

Icahn Automotive’s automotive services and aftermarket parts businesses serve different customer channels and have distinct strategies, opportunities and requirements.

As a result, the board of directors of Icahn Automotive has approved the separation of certain of its aftermarket parts and automotive services businesses into two independent operating companies, each with its own management team.

In January of 2023, a subsidiary of Icahn Automotive, IEH Auto Parts Holding LLC and its subsidiaries (“Auto Plus”), an aftermarket parts distributor held within our Automotive segment, filed voluntary petitions (the “Chapter 11 Cases”) in the United States Bankruptcy Court for the Southern District of Texas (the “Bankruptcy Court”) seeking relief under Chapter 11 of Title 11 of the United States Code.

In the course of the Chapter 11 cases, Auto Plus will seek to sell substantially all of its assets pursuant to Section 363 of the Bankruptcy Code, with the proceeds of such sale used to satisfy obligations to its creditors, and to settle or discharge all of its obligations, in each case subject to approval by the Bankruptcy Court.

We conduct our Automotive segment through our wholly owned subsidiaries, Icahn Automotive Group LLC (“Icahn Automotive”) and AEP PLC LLC (“AEP PLC”).

The Automotive segment is headquartered in Bala Cynwyd, Pennsylvania.

The Automotive segment is engaged in providing a full range of automotive repair and maintenance services, along with the sale of any installed parts or materials related to automotive services (“Automotive Services”) to its customers, as well as sales of automotive aftermarket parts and retailed merchandise (“Aftermarket Parts”).

In addition to its primary businesses, the Automotive segment leases available and excess real estate in certain locations under long-term operating leases.

On January 31, 2023, a subsidiary of Icahn Automotive, IEH Auto Parts Holding LLC and its subsidiaries (collectively “Auto Plus”), an Aftermarket Parts distributor held within our Automotive segment, filed voluntary petitions (the “Chapter 11 Cases”) in the United States Bankruptcy Court for the Southern District of Texas (the “Bankruptcy Court”).

As a result of Auto Plus’ filings for bankruptcy protections on January 31, 2023, we no longer controlled the operations of Auto Plus, and therefore, we deconsolidated Auto Plus as of January 31, 2023.

See Note 3, “Subsidiary Bankruptcy and Deconsolidation”, for a detailed discussion of the Auto Plus bankruptcy and deconsolidation.

Our Automotive segment’s net sales for the years ended December 31, 2023, 2022 and 2021 represented approximately 9%, 13% and 17%, respectively, of our consolidated net sales.

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Over the past decade, consumers have moved away from do-it-yourself (retail) toward do-it-for-me (services) due to increasing vehicle complexity and electronic content, as well as decreasing availability of diagnostic equipment and know-how.

Icahn Automotive provides its customers with access to over two million replacement parts for domestic and imported vehicles through an extensive

network of suppliers.

Icahn Automotive seeks to provide (i) an extensive selection of product offerings, (ii) competitive pricing, (iii) exceptional in-store service experience and (iv) superior delivery to its customers.

Icahn Automotive purchases parts from manufacturers and other distributors for sale in the aftermarket.

The Automotive segment seeks to provide (i) an extensive selection of product offerings, (ii) competitive pricing, (iii) exceptional in-store service experience and (iv) superior delivery to its customers.

The Automotive segment purchases parts from manufacturers and other distributors for sale in the aftermarket.

Purchases are made based on current inventory or operational needs and are fulfilled by suppliers within short periods of time.

During 2022, Icahn Automotive’s ten largest suppliers accounted for approximately 60% of the merchandise purchased and its two largest suppliers accounted for more than 29% of the merchandise purchased.

Icahn Automotive believes that the relationships that it has established with its suppliers are generally positive.

In the past, Icahn Automotive has not experienced difficulty in obtaining satisfactory sources of supply and it believes that adequate alternative sources of supply exist, at similar cost, for the types of merchandise sold in its stores.

During 2023, the Automotive segment’s ten largest suppliers accounted for approximately 85% of the merchandise purchased and its two largest suppliers accounted for approximately 37% of the merchandise purchased.

The Automotive segment believes that the relationships that it has established with its suppliers are generally positive.

In the past, the Automotive segment has not experienced difficulty in obtaining satisfactory sources of supply and it believes that adequate alternative sources of supply exist, at similar cost, for the types of merchandise sold in its stores.

Other Operating Segments

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Approximately 70% of Viskase’s net sales during 2023 were derived from customers outside the United States.

In October 2020, Viskase completed an equity private placement whereby we acquired an additional 50,000,000 shares of Viskase common stock for $100 million.

In December 2022, we purchased an additional 1,123,363 shares of Viskase common stock for $1 million.

As of December 31, 2023, we owned approximately 90% of the total outstanding common stock of Viskase.

Our Real Estate segment consists primarily of investment properties, the development and sale of single-family homes and the management of a country club.

We conduct our Real Estate segment through various wholly owned subsidiaries.

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.

We conduct our Home Fashion segment through our wholly owned subsidiary, WestPoint Home LLC (“WPH”).

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We conduct our Pharma segment through our wholly owned subsidiary, Vivus LLC, formerly Vivus, Inc.

We acquired all of the outstanding common stock of Vivus in December 2020 upon its emergence from bankruptcy.

Prior to Vivus’ emergence from bankruptcy, we held an investment in all of Vivus’ convertible corporate debt securities as well as all of its other outstanding debt.

Vivus is a specialty pharmaceutical company with two approved therapies and one product candidate in active clinical development.

Vivus is a specialty pharmaceutical company with two approved therapies and two product candidates in active clinical development.

We conducted our Metals segment through our wholly owned subsidiary, PSC Metals, LLC (“PSC Metals”).

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We have an aggregate of 38 employees at our Holding Company and Investment segment.

Our other reporting segments employ an aggregate of approximately 20,000 employees, of which approximately 67% are employed within our Automotive segment, 12% are employed with our Food Packaging segment and 10% or less at each of our other segments.

Our other reporting segments employ an aggregate of approximately 15,000 employees, of which approximately 58% are employed within our Automotive segment, 14% are employed within our Food Packaging segment, 11% are employed within our Home Fashion segment and 10% or less are employed at each of our other segments.

Approximately 20% of our employees are employed internationally, primarily within our Food Packaging and Home Fashion segments.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business