ICL Group Ltd. Q3 FY2024 earnings call

Management Statement and Operational Highlights

• General Update: Sales of $1.753 billion up for third consecutive quarter; adjusted EBITDA $383 million up for fourth consecutive quarter. Year-to-date free cash flow $572 million. Adjusted EPS $0.11, up 10% sequentially.
• Dividends: Next month, distribute approx $0.05 per share dividend. Focus on cash generation, cost savings, and innovation pipeline.
• Divisions: Industrial Products saw sales and EBITDA growth. Potash faced staffing and shipping challenges but Spain operations had record production. Phosphate Solutions expanded into new markets. Growing Solutions signed China agreement and integrated Custom Ag Formulators.
• Innovation: Battery materials business, Customer Innovation and Qualification Center nearing completion. Agmatix recognized by Fortune for regenerative agriculture.

Segment Performance

• Industrial Products: Third quarter 2024 sales were $309 million, up 16% year-over-year. EBITDA increased 55% to $65 million, with an EBITDA margin of 21% (up from 16% prior year).
• Potash: Third quarter 2024 sales were $389 million, EBITDA $120 million. Average potash price down $45 CIF per ton year-over-year. Total annual potash sales volumes limited to 4.6 million metric tons in 2024.
• Phosphate Solutions: Third quarter 2024 sales $577 million, EBITDA $140 million, up year-over-year. EBITDA margin expanded to 24% from 20%. Expanding into new products and end markets.
• Growing Solutions: Third quarter 2024 sales $538 million (down year-over-year), EBITDA $64 million, up over 70% year-over-year. EBITDA margin 12% (expanded significantly). Signed a five-year $170 million agreement in China for specialty water soluble fertilizers.

Guidance

• Specialties Driven Business: 2024 EBITDA expected $0.95 billion to $1.05 billion, up from previous guidance $0.8 billion to $1 billion.
• Potash: 2024 total annual potash sales volumes limited to 4.6 million metric tons, in line with 2023 volumes, anticipating improved conditions in 2025.
• Tax Rate: Effective tax rate for 2024 expected ~28%, same as third quarter.

Risks

• Geopolitical: Logistics and shipping challenges due to Israel's war impacting potash sales and transportation costs.
• Market Volatility: Bromine prices under pressure; potash market fluctuations; geopolitical uncertainties affecting global markets.

Question and Answer

• Q: Any preliminary specialty outlook for 2025? **A: Raviv Zoller mentioned trends look okay, but no specific version to share yet; Aviram Lahav noted will share when Q4 and 2024 results are out.
• Q: Impact of geopolitics on shipping and Belarus potash production? **A: Raviv Zoller discussed logistics adjustments and transportation cost increase; potash market firming despite Belarusian uncertainties.
• Q: Sensitivity of specialties EBITDA guidance and industrial products pricing trend? **A: Raviv Zoller and Aviram Lahav discussed seasonality and price stabilization in industrial products; guidance sensitivity related to market performance in different divisions.
• Q: Breakdown of specialties EBITDA guidance and potash sales discipline? **A: Raviv Zoller and Aviram Lahav explained difficulty in breaking down specialties EBITDA by division; potash sales limited to 4.6 million tons for improved conditions and better pricing.
• Q: Appetite for investing in white spaces like gene editing? **A: Aviram Lahav stated focus on applied R&D in growing solutions, investing in areas like biologicals and nutrient efficiency, but cautious about jumping into remote areas.
• Q: Chinese bromine capacity exit? **A: Raviv Zoller mentioned ~60-70k tons muted, high cost tonnage, and ICL's cost position advantage.